Joint life insurance
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A joint life insurance policy can often be cheaper than getting two single life policies.
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What is joint life insurance?
No man (nor woman) is an island, so they say, however that doesn’t stop many of us choosing to go it alone in many areas of our lives. Like meditating, consuming a meal in for one, playing on our games console, going for a run, applying a face mask and taking a selfie. But sometimes doubling up makes far more sense.
There can be added security in numbers, and securing the maximum amount of insurance cover for the most competitive price would be pretty high up the wish list for anyone preparing to arrange an extensive (yet affordable) life insurance policy, surely?
Shrewdly purchasing two commodities for the price of one has long been a massive USP here in the UK, as us bargain-seeking Brits perpetually hope to cash in on heavily discounted deals flagged up on all manner of products and services. As a nation, we’ve always had an eye for a bargain and a nose for a good deal; so why should we not apply this same approach to our insurance needs?
Well, thanks to a plethora of wide-ranging insurance policies and far-reaching insurance plans routinely offered by some of the country’s leading insurance policy providers, we don’t have to hunt that wide or that far.
Precisely what it implies. A dedicated policy which insures two individual lives courtesy of a single policy, and which is specifically designed to pay-out in the event of either partner’s death. Aimed at anyone and everyone, be they married couples, registered civil partners or co-habiting partners with established and shared financial obligations already.
At the point of arranging, a joint life insurance policy allows the proposed policyholders to decide on the term cover or duration (in terms of years) in which you wish the policy to run for, and you subsequently pay a fixed term amount.
The premise is that the surviving partner will receive the financial settlement if either partner passes away during this pre-disclosed passage of time. This ‘first death basis’ – on which the insurance is paid out to the surviving partner in the aftermath of the first one’s demise – is for the most part the acknowledged policy bedrock when it comes to joint life insurances.
While the founding principle of this works best when there’s only the two people dependent on one another (and they want to secure their financial future should the other one die), joint life insurance policies are also geared up with a broader dependent audience in mind; not least any children who themselves stand to benefit in these circumstances.
Do I need a joint life insurance policy?
While not compulsory we would always encourage couples of any standing to seek suitable means to recompense those dependent on them at the end of this day and the final one they share with loved ones.
Two heads are widely regarded as of more use than the one, so why not adopt the same mantra when it comes to life insurance? In today’s society there are increasing numbers of two breadwinners as more recent mothers look to return to their pre-baby careers.
Therefore the loss of either income through unexpected death would create fundamental fiscal issues. And it’s not just career-orientated parents who should think long and hard about joint life insurance plans, as the role of stay-at-home parental units shouldn’t be overlooked in the grand scheme of things. Raising children and looking after the home is a position which if it was salaried would command a hefty wage, despite not directly benefitting from it financially in a historical context.
But just imagine if a stay-at-home parent passed away, and the financial strain as well as emotional burden it would have on the surviving partner. Significantly reducing their work hours so as to devote more time to their family or alternatively paying for the additional help (domestic or nursery) would come at a massive cost to the budget, so the financial cushion a joint life insurance policy would have if and when it came to fruition would be almost incalculable.
Commonly found to be decisively cheaper than two single life insurance policies in terms of annual/monthly premiums, joint life insurance plans are ideal for young couples who are constantly looking at ways to stretch the purse strings when setting up a new life/home/family together, while business partners could well be attracted to a joint life set-up as a contingency plan to ensure the future continuity of their trading.
How much does a joint life insurance policy cost?
On average joint policies cost less than two single life insurance policies, which – along with half the paperwork and hassle – is probably why joint life insurance plans count for more than their sole counterparts according to research.
It’s not a case of how much it costs you at the point of purchase which should be your primary concern though, more what it could end up costing you if you don’t arrange a joint life insurance policy. Or if you do, for that matter. Confused? Then let us explain…
To afford you a balanced perspective on joint life insurance policies you should be aware that although cheaper to buy in the first instance, they could end up costing you more in the long run. In as much as should one partner go first, then the surviving partner/offspring will be out of pocket in the event of the second one’s demise, due to the one pay-out. Unless the remaining partner elects to arrange a new single life insurance policy on their own, which again will result in additional cost.
What’s more is that in the intervening period since they took out the initial joint plan their health may have become more compromised (age-related possibly), thus resulting in higher premium quotes on their new single life cover. All worth bearing in mind before putting pen to paper.
What can I do to reduce the cost of a joint life insurance policy?
As with single life insurance policies, one of the main premium barometers is an individual’s (albeit a collective individual in this instance) general health and wellbeing. Convince the joint life insurance provider that you’re not likely to say your goodbyes any time soon – by conveying yourself as a picture of health (eating your greens, getting regular exercise and not stressing too much and/or smoking/drinking to excess all play significant parts) – and you’ll be classed as a safe bet to life long and prosper.
With or without your elected partner. And consequently your premiums will topple. If your health picture isn’t quite as rosy as it once was, do something about it.
Also consider opting for ‘second death’ policies with direct regard to your proposed joint life insurance plan.
Although the dependents would not be able to claim on the death of the first person in the partnership, they would be paid-out in full in the unpredictable (and largely unlikely) event that the surviving partner would follow suit a couple of years down the line.
It’s this calculated risk (which renders the potential odds extremely long) which means that premiums for second death joint life insurances are traditionally much cheaper than if you were to cite first death as your play-out clause trigger.
Not so much to help reduce the policyholder’s costs, but of great future importance to your dependents, is to ensure that your joint life insurance policy is written in trust, so as to avoid the spectre of inheritance tax. It’s for the long game we know, but isn’t that what all this is about?