For many people, investing in a life insurance policy is a big step. It is a large commitment and usually indicates that we have responsibilities that make our life worth insuring.
Many types of life cover can be purchased from a fairly young age – with some available to 18-year-olds. But at this age, people don’t generally have many financial responsibilities or others dependent on them.
But as we get older, we undertake more commitments, be they financial or otherwise. We may take out a mortgage, build up debt or even start a family – all of which place more responsibility on our shoulders.
So, it is little wonder that some people choose to take out a life insurance policy, to protect themselves and their loved ones in the future.
Life insurance comes in a number of different forms, with each one catering for different needs. But the purpose is generally the same – to provide financial protection should something happen to the policyholder.
Whatever financial commitments there may be, a key motivator for many people taking out life insurance is their family. Starting a family is one of the biggest commitments you can make, and is a life-long undertaking.
It is little wonder, therefore, that some people choose to invest in life insurance when they have children.
Joint life cover becoming more necessary
Traditionally, a life insurance policy is taken out by the main breadwinner in the family – to ensure that the family can cope financially with the main income.
But in these tough economic times, many families are now relying on two incomes to make ends meet each month. For this reason, a joint life insurance policy is becoming a more attractive life cover option.
While there may still be one main primary income in a typical family, the rising cost of living means that a lot of families need two incomes to survive. While one may be less than the other, many families would not be able to cope without both incomes coming in.
This is what a joint life insurance policy is designed for – to cover two policyholders under one policy, ensuring that each policyholder will be protected if the other passes away.
Dealing with any type of insurance can sometimes cause a bit of a headache, whether it’s deciding what type of car insurance to get, or simply how much cover you need before you go on holiday.
Life insurance is no different, and could even be said to be a little more complicated than most other insurance products out there. This is simply because people are quite complicated, so there needs to be a different type of life cover to suit the needs of each individual.
Joint life insurance explained
The concept of joint life insurance is, of course, quite simple – it is a policy to cover two people rather than one. The complexities lie in the type of cover offered to those two people.
The most common type of joint life insurance is probably first death cover. This is generally a type of term life insurance – a policy that lasts for a set amount of years, and only pays out if there is a death within the designated time frame.
As the name suggests, a first death joint life insurance policy pays out on the first death during the policy’s term. This means that the surviving policyholder and his or her family, if they have one, will receive the payout from the policy.
This is the more common type of joint life insurance, as the premiums are generally higher as the risk to the insurance provider is greater.
This type of policy only pays out once, meaning that the surviving policyholder is left without any cover. This can be problematic, especially if the second policyholder is older as it can be harder and more expensive to obtain another life insurance policy.
The second type of joint life insurance is second death cover, which pays out when the second policyholder passes away. This type of joint life cover is often used to cover things like inheritance tax, or financially support any children left behind.
As the risk to the insurance provider is less than that of first death joint life cover, the premiums for this type of cover are generally lower.
Should you take out joint life cover?
Joint life cover can be an attractive option for married or cohabiting couples, or even business partners with joint financial obligations.
But before you and your partner invest in a joint life policy, it may be worth considering whether it may be better to invest in two separate single life insurance policies.
A joint life insurance policy will only pay out once, meaning the beneficiaries will get less than if there are two single policies in place. But the cost of two single life policies can be higher than one joint life cover policy, so it may be an idea to research the costs thoroughly before investing.
It is could also be worth considering what would happen if you were to separate from your partner, or they stopped paying their share of the premium, as this could cause the policy to lapse.
It is worth speaking to a qualified adviser about your options for instance you might want to consider two single policies; giving your family double the cover. An adviser will be able to search the market and provide you with a policy tailored to your family’s needs. Call Asda Life Insurance on 0800 9751208.
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