Life can be very uncertain and unfair. Many of us have found ourselves saying goodbye to a loved one unexpectedly and abruptly. Apart from the emotional pain of dealing with the burden of death, one could also find themselves in a world of financial shortfalls with the loss of income. Funeral expenses alone could amount to a substantial sum and have put people in debt at times.
This is where life insurance coverage comes in, as it can help couples deal with any unforeseen financial impact that may arise in the event one of them were to meet an untimely and unfortunate demise. Couples can opt for a joint insurance policy, where either partner (and any kids they may have) could be the beneficiary of the policy. You could contact an insurance broker like Pat McIver to learn more about specific policy structuring options.
However, today we’ll still be talking to you about joint insurance policies to give you a general overview and help you formulate questions if you were to consider a joint policy and speak to a professional advisor.
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TYPES OF JOINT INSURANCE
One can opt for the payout to be structured in a way so as to payout upon the death of one partner, or after both partners have passed away.
The first type is called “first-to-die life insurance” where the life insurance benefit is paid upon the death of one of the partners. This is found commonly among younger couples and serves as a way of replacing the income of the partner who has passed away. The second type is called “second-to-die life insurance” and it pays out only when both partners have passed away.
Quite obviously, second-to-die life insurance won’t provide any household income replacement, so it typically forms a part of estate planning, with benefits going to surviving heirs and other named beneficiaries like family members or charitable organizations.
HOW IS JOINT LIFE INSURANCE DIFFERENT?
There are a few differences to note when it comes to individual and joint policies. An individual policy covers only one person and will pay out when that one person dies. Whereas joint policies provide coverage for the two people who subscribe to the policy and would payout in the event either one of them were to die.
As mentioned above, a joint insurance policy doesn’t require that the two people subscribing to it be married and either will be beneficiary to the death benefit regardless of marital status. However, if you have an individual policy, and you want your partner to benefit from the policy should the unforeseen happen, then you would need to be married or in a common-law partnership.
Finally, joint coverage can be more affordable. Considering two people are jointly paying for the same amount of money that they would have to pay individually under separate policies. However, the total payout of a single joint insurance policy would not be the same as that found with two separate policies of the same value.
In a nutshell, a joint insurance policy is a way of gaining affordable security for young couples. There is no reason that insurance for couples, and the security that it offers, be exclusive to a certain economic class of people. Moreover, if you’re opting for a second-to-die life policy, then you’ll have control over the estate planning in the event your partner were to pass away and, for example, you can alter beneficiaries or, if needed, tap into the policy’s cash value.
DRAWBACKS TO CONSIDER
While there is no doubt that joint policies can provide life insurance protection to couples to help deal with any financial responsibilities and unforeseen future expenses, there are certain drawbacks of affordable coverage that one should consider. First and foremost, joint insurance policies are a niche product and not many insurance companies carry such policies.
Even if you do find a life insurance company that provides joint policies, you’d be restricted to a few life insurance options. Most providers who do offer joint policies won’t offer permanent life insurance, and if you’re going with a term policy, you could not see many benefits when the term concludes. This does not mean you won’t find a provider that offers both permanent and term life insurance under a joint policy, but it’s possible you might have to look a bit hard.
TALK TO A BROKER NEAR ME
A leading insurance broker located in Halifax, NS, is McIver Insurance. They specialize in all types of insurance, be it dental insurance or even your existing life insurance plan. They can offer transparent and updated life insurance quotes, along with professional advice to enable you to make decisions with confidence. If you are looking for life insurance in Nova Scotia, McIver promises the best policies that are tailor-made for you. Speak to one of their consultants today to learn more!