Joint Term Life Insurance – The Guru’s Guide To Joint Term Life Insurance
Joint term life insurance is a unique insurance product and one that can be used in a variety of different financial planning situations. The joint term life insurance policy offers some very specific options for individuals looking for this type of temporary insurance protection. Whether you only need coverage for a set number of years, or you simply need the cheaper insurance that term life policies provide, joint term life insurance can provide a powerful tool to help you achieve your financial needs.
How Does Joint Term Life Insurance Compare to Individual Term Life Insurance?
As you probably already derived from the name of this insurance product, joint term life insurance is simply a different type of term insurance. Where both policies are similar lies in the fact that both are offered for a specific term or period of years. The two more common forms of term life insurance are: 10-year term insurance and 20-year term insurance.
A term insurance policy is setup to provide a predetermined death benefit upon the passing of the account holder. This benefit is offered for a set number of years or for the term of the contract. After the term is up, the policy can terminate, provide the option to renew, or convert to a whole life insurance policy.
The primary difference with a joint term life insurance contract is the fact that the contract covers the life of more than one owner. Or in other words, the contract is owned jointly and covers the life of two individuals.
What Different Types of Joint Term Life Insurance Are There?
There are two main types of joint life term insurance. The most common type is called joint and first-to-die term insurance (among other variations of that name). This type, as the name implies, covers the life of two individuals, and is executed upon the death of the first of the two to die. Once the first individual dies, the death benefit of the policy is paid to the beneficiary (or possibly the other joint owner if that is how it is designated).
The second type of joint term life insurance is joint and survivorship term life insurance. This type works opposite of the first-to-die. The contract’s death benefit is paid out upon the death of the surviving owner of the policy. This type can be considered a last-to-die type of policy.
Joint Term Life Insurance Is Commonly Used By Married Couples
Probably the most common form of term life insurance for joint lives is between two married individuals. There are often restrictions as to whom you have a joint life insurance policy with. The owners typically must have a justifiable relationship with each other. These two individuals typically need to share some joint common interest, and have a strong arguable connection to need a joint term life policy.
The advantage that most married couples see in sharing a joint term life insurance policy is the money saving aspect of the insurance product. Rather than the expense of having two separate insurance policies that cross-cover the life of their spouse, they can combine the policy into one and share the premium. As it is difficult under most circumstances to guess which spouse will die first, this type of policy helps to cover all of the bases of the couple. While there are certainly different ways to provide the same type of joint coverage, term life insurance on joint lives offers the simplest and often cheapest alternative.
What Are Some Companies That Offer Joint Term Life Insurance Policies?
There are certainly companies that will specialize in particular areas of insurance sales, however, joint term life insurance is commonly offered among the top companies. The easiest way to shop for a joint term life insurance contract is to speak with an agent that is licensed with multiple major companies. Your agent should have information on what will be the best contract for your situation.
As with any other insurance product, we repeatedly recommend that you select you insurance company carefully. You want to select an insurance company that has a good rating from one of the rating agencies. Standard and Poors offers company grades on most insurance companies (and those it doesn’t should be considered). Find a company with a good rating and has a history of good customer satisfaction. Also keep in mind that insurance products vary from state to state, as the insurance industry is state regulated.
Summary
Joint term life insurance can provide a powerful planning tool when used in the correct situations. It is a low cost alternative to other cross-coverage insurance products, and can provide owner’s the flexibility they need to reach financial freedom.
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