3 Common Concerns Regarding Joint Life Insurance

Joint life insurance is an alternative form of life insurance that provides benefits for two parties. You and your spouse might decide to get joint life insurance together and it will provide death benefits for both parties. Whichever one dies first, the other person gets the money. Therefore, you know the insurance policy will pay out at some point. While this can be a beneficial form of life insurance coverage at times, there are also some common concerns with it. Here are a few concerns with joint life insurance policies.

1. Cost

The first concern with joint life insurance is the cost. When you are dealing with joint life insurance as compared to traditional forms of coverage, it will almost always be more expensive. Many would argue whether the additional cost of the insurance premiums is worth the benefit. From the insurance company's perspective, they have to take care of their interests as well. With a joint life insurance policy, they know that one of the two people will die and they will have to pay the other person. Therefore, they have to prepare for this inevitable fact and charge everyone accordingly. There is a much higher payout rate with this type of policy and it raises the cost overall. You have to compare it with other policies to make sure that it is worth the extra cost.

2. Divorce

One thing that can exponentially complicate a joint life insurance policy is divorce. When you are in a policy together, it is much easier if you are married and working towards a common goal. When you get divorced, it muddies the waters of the policy coverage benefits. What happens if one spouse keeps paying the benefits while the other does not?

One of the most confusing cases is when one of the spouses with the joint life insurance remarries. If they remarry and end up dying quickly, who is the beneficiary of the policy? Does the original spouse with whom they entered the policy with get the money even though they are not married? Or does the new spouse that was not involved in the policy get the money? This situation gets even more confusing if one of the divorced parties stops paying the premiums and gets remarried. All of these issues help to make joint life insurance very confusing.

3. Two Individual Policies?

One common question that many couples ask is whether or not they would be better off with two individual life insurance policies instead of a joint policy. In many cases, they would be better off. Two individual policies would usually have cheaper premiums combined than the individual premium of the joint policy. In addition to that, it makes figuring out the beneficiaries much easier when you get to that point. No one wants to plan on a divorce, but it makes separating the assets much easier as well. Consider getting two individual policies when looking at joint life insurance and see which option makes more sense for you.

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