A joint life insurance policy is a policy that enables two individuals to be protected, but the full value of the policy is paid only once at the time of either insurer’s death. This is also known as the joint first to die clause. Your spouse, children and even your business partner can benefit from a joint life insurance policy.
There are different types of joint life insurance. Level term assurance is the basic type of joint life insurance. In a level term assurance if and when one of the policyholder dies then payout is made. But when the surviving policyholder dies, then no more payment will be made even if the policy has still not lapsed. Another type of joint life insurance is the decreasing term assurance also known as the mortgage protection insurance. This covers the capital as well as the interest of the mortgage, which are all payable when the one of the policyholders dies. Some joint life insurance policies have critical illness benefits. The policy will pay a lump sum should either one of the policy holder is diagnosed of any critical illness such as heart attack, cancer, stroke, or multiple sclerosis.
Most joint life insurance policies earn dividends from the premiums being paid by policyholders. These dividends can be used to reduce premium payment or it can be left to accumulate with interest. You can also opt to receive it in cash. Most joint life insurance policies will allow you to borrow from the cash value of the policy. If you do not pay back the loan with interest, it will be deducted from the proceeds of the policy during death or if it is surrendered prior. Most joint life insurance companies require premiums to be paid either until the 100th year of the younger insured or until the second death. Generally, these premiums are at level and do not change with time. Many joint life insurance policies have non-forfeiture options protect the policyholder against incidents wherein they were unable to pay their premiums. You can also get optional benefits at an additional cost. Optional benefits include waiver of premium benefit. With a waiver of premium benefit, you need not pay the premiums if you become disabled. Another optional benefit is death waiver of premium that provides for the waiving of payment when one of the holders dies for a specified period of time.
