Joint Life Insurance

As a parent, you want to make sure your children are covered no matter what happens. With so many options to choose from, it can be hard finding life policies that's the best fit for your family. Many couples opt to get Joint Life Insurance.

Joint Life Insurance is a policy that covers two people or more on one plan. Typically parents buy it to make sure their children will be covered when they pass away. Two names are put on the plan, and it will pay out in one of two situations: when one policy holder has passed away, or when both people on the plan have passed away.

Joint coverage is great for a household with dual incomes or for a family that owns a business, and it can help you save money since it is cheaper than buying two separate policies.

When to Buy Joint Life

Joint life may be the better insurance policy for you if:

• You and your spouse own a family business together
• You and your spouse both earn about the same income
• You owe a portion of a mortgage and don't have mortgage life insurance

While this plan is typically purchased by couples with children, business partners may buy it if they both pay part of the building mortgage for their company.

Joint Life (First-to-Die)

This plan will pay out after one person on the plan has passed away. The premiums on this type of plan are based on the average age of the policyholders. While technically the premiums for a joint life policy would be higher than policies that pay for one person, as there is a higher likelihood that the policy will have to pay out sooner, buying this policy can actually help you save money as it is cheaper than buying two separate policies.

There is one major disadvantage to buying First-To-Die joint insurance. The survivor may need to purchase life insurance after the first holder dies, and since you won't know who will die first, he or she will have to wait. By the time s/he is looking again, s/he might not be as young and policies may be more difficult to find.

Also, you may not want to get joint life if there is a large difference between your income and your spouse's. If one of you makes more than the other, then when one person dies, the other may be covered too much and the other may not be covered enough.

Survivorship (Second-to-Die)

In a Second-to-Die or "Survivorship" plan, the beneficiaries will be paid after the death of the second person on the plan. A survivorship plan may have lower premiums because there is a longer span of time before it will have to pay out.

An advantage to this type of plan is that you can write it in your children's names, so after both policy holder's have passed away, the children can receive the money as soon as possible, without having to worry about it being tied up in court.

Both policies can be written as term life or whole life policies. Joint Life can be a great way to save money while ensuring that your children will be covered even after you have gone.