What Joint Term Life Insurance is All About

There are a lot of terms, phrases and policies in the life insurance market and it is very common to find yourself confused especially when you are not used to it. Anyway, as you know, you will notice that there are different types like life insurance and term insurance.

However, within the two categories, there are more specific variables such as joint life insurance. Basically, there is not much difference compared to standard life insurance which covers one individual but a combined policy that covers more than one person. Usually, spouses or anyone with whom you share a monetary obligation, you can consider that you are insured under a joint plan. As a result, both husband and wife are protected as well as children in the event of death. You need to assess your situation and needs before considering purchasing a term joint life insurance policy.

Some have referred to the joint policy as first-degree life-to-death co-insurance where policy benefits are paid only once. This means that there is only one payment to the surviving partner when the first co-insurance policy holders die. A joint policy may not be right for you even if you are married. However, it makes sense to have children, are a homeowner or retiree to make sure you provide enough protection for your children, to pay off the mortgage and have a comfortable retirement life.

Most married couples consider buying a joint policy under the following situation:

  • New Home Owners – The most common benefits if joint life insurance is mortgage protection. A joint life insurance policy guarantees that the surviving spouse will be able to pay off their mortgages and other related debts.
  • New Parents – Mutual life insurance covers childcare expenses and tuition if your spouse dies before your children are older.
  • Retirees – The term joint life can be used for retirement planning because it allows purchasing an annuity with more options. Typically, annuities are purchased with options that provide monthly payments until the death of the first partner (one annuity), or until the death of the remaining partner (the last annuity). The first option offers higher monthly payments without jeopardizing the partner’s remaining income. The reason is that the policy will be paid to the surviving partner upon the death of the first partner. If you choose the second option, it will provide the remaining partner with a regular monthly income that is less than the income provided by one annual salary.

Once you have made your decision to purchase term joint insurance for you and your family, you will need to consider the term of your policy. Usually, people choose coverage for 10 or 20 years. If you have young children and just bought a new home, 10 years is usually enough. Couples with older children, whose mortgage is paid off or near retirement, can think long-term.

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