Which Is Best: Joint or Single Life Insurance?
If you die with the wrong kind of life insurance, you could ruin your spouse, financially. When choosing a permanent life insurance policy for you and your spouse, there are two basic types of policies you can consider: individual--single--life insurance or joint life insurance. Make sure you have a firm grasp on which is best for your situation.
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Single Life Insurance
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Single life insurance is individual life insurance that only covers one life. When you or your spouse die, depending on whose life is insured, the policy pays a death benefit to the other spouse. However, the policy only covers one life, so both of you need a policy. This type of policy is ideal if you each have different life insurance needs or one spouse doesn't need--or want--life insurance. Alternatively, this policy arrangement is ideal if one spouse is either much older than the other, which would drive up costs of a joint policy, or simply doesn't qualify for life insurance.
First-to-Die Joint Life Insurance
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Joint life insurance that pays a benefit when the first spouse dies will pay an immediate benefit as soon as one spouse passes away. In this type of policy, both spouses are insured, so you and your spouse are covered under the same life insurance policy. Premiums may be lower than with an individual policy if you are both around the same age and have the same general health status. This type of policy is ideal when you want to save money on life insurance premiums and can do so by insuring both of your lives under one policy.
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Last-to-Die Joint Life Insurance
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Last-to-die joint life insurance may also pay a benefit with you and your spouse under the same policy. A policy that pays when the second spouse dies is ideal when you want to leave behind an inheritance to your children or to a charity. This type of policy insures both you and your spouse, with the named beneficiary being someone other than your spouse. Because the policy only pays when the second spouse dies, neither you nor your spouse can be named as the beneficiary on the policy.
Consideration
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Before deciding on what policy to purchase, you should carefully consider your financial goals. You should also make sure that your spouse does not need any money prior to purchasing a joint policy that pays when the last spouse dies. Even when purchasing a joint policy, it's possible to save money on the premiums by insuring both lives under one policy, but there is no guarantee that a joint policy will always be cheaper.
You should get quotes from several life insurance companies prior to making a decision as to which policy to purchase. You may discover that the individual policy is actually less expensive than a joint policy. The driving factor behind insurance costs is going to be your age and health. If you and your spouse's health differ significantly, the joint policy may not be ideal for you.
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