Video: Joint life insurance

A recent survey found that middle-class households are cutting back on insurance and medical cover as their budgets come under pressure.

However, if you have a family, life insurance is essential to provide for them if something happens to you.

If you are a married couple with children, one affordable option is to take out joint life insurance. This allows you and your partner to be covered by a single policy, with the same terms and conditions. It is usually cheaper than having to pay for two individual life insurance policies.

It is paid out irrespective of which spouse or partner dies. The surviving partner will no longer be insured but they and their children will be financially secure, even though an income has been be lost.

Joint cover leaves the family more secure than if only one spouse was covered, and stay-at-home moms and dads can be covered too, which means that extra burdens like childcare costs are covered should they pass away. It can also be used to settle debts, taking away financial strain at a very emotional time.

You have two payout options. A “first death” policy pays out if either policy-holder dies and the remaining partner would not be covered by the policy any longer. Keep in mind that the living partner may have difficulty taking out a new life insurance policy, as they would probably be older.

A “second death” policy pays out when both policy-holders have passed away. This type of policy is often more expensive.

If both spouses die at the same time, the payout becomes part of the estate or they can opt to put the money into a trust fund.

A joint life insurance policy can not be divided on divorce. If one partner decides to not pay their half, the policy will cease to exist unless the other partner decides to take it over and requests a change in beneficiary. This decision can be made based on the primary caregiver or financial provider of shared minor children.

When taking out life cover it is worth doing your research to make sure you are comparing like with like.

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