Key takeaways about joint life insurance

• • A life insurance policy or rider can help couples take care of joint commitments or future plans
  • Couples choose to have life insurance for many reasons including to pay off a mortgage, settle debts, handle final expenses, manage living expenses, or provide for heirs
  • Options range from an individual term life or permanent policy for each individual in a couple to riders that expand coverage

What is a joint life insurance policy?

A joint life insurance policy covers two people. It is often purchased by a married couple and can be used if one partner does not qualify for their own policy or for estate planning. Like other life insurance, joint life insurance provides loved ones with financial support if you pass away. Most of these policies tend to be permanent life insurance policies that last for your lifetime. However, term joint life insurance policies are also available, which last for a set period.

Why should couples have joint life insurance?

You’ve both worked hard to build your life together. You’ve got plans for a thriving future. Life insurance helps ensure the life you’ve built together continues.

Your contributions might be financial, such as a salary that helps cover the mortgage, child care, and other bills. Should you pass, you want to be sure your family can continue to manage day-to-day and plan for the future, including college, vacations, and other important milestones.

You might also provide for your  family in significant ways essential to your family, like staying home with children and managing the household. You want to be sure your contributions would be covered by exceptional childcare providers and other help if you died.

Every couple and family is unique, with different financial responsibilities and circumstances. There are many different options for life insurance for couples, from term life insurance to cash value policies, and a wide range of riders to expand your coverage.

Reasons couples should have life insurance

Being in a serious relationship often means big life choices and commitments – like housing, children, and joint bank accounts.

If something happens to you, you’d want your partner to be able to manage the obligations you both agreed to take on as a couple. You might also want to plan for your future.

Either way, a life insurance policy death benefit could help with:

Paying off a mortgage

If you and your partner buy a house together, your monthly mortgage payment was probably predicated on your joint income. If one of you dies, that income is gone, and managing a house payment alone can be a big burden on the one left behind. A life insurance policy can help pay off a mortgage and relieve anxiety and financial stress.

Settling debt

If you and your loved one have debt together, such as personal loans on a joint account, a vehicle loan, or credit card bills, the surviving half of the couple could be legally responsible for the joint debt. A life insurance payout could help cover these bills, leaving a clean slate.

Handling final expenses

A funeral and burial can be hard enough without the crippling cost of such events. Make financial worries the last thing your loved one has to think about if they have to face the loss of their partner.

Managing living expenses

If one of you is the main breadwinner while the other runs the house and cares for the children, the loss of either parent could be devastating. A non-working spouse will need financial support, and a working spouse may need to come up with a way to pay someone to do all the work previously done by the non-working partner

If you have children together, you’ll want to make sure they are well provided for in the event of your death, and even more so if you and your partner both pass away. Depending on the age of your children, you may need a policy that would replace your and your spouse’s income until they reach their age of majority, with extra to get them started on their path in life.

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There are a range of affordable Fidelity Life products to choose from based on your situation and financial responsibilities.

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How do joint life insurance policies work?

There are two types of joint life insurance policies: first-to-die life insurance policies and second-to-die life insurance policies. These policies work differently and are designed for specific needs.

First-to-die life insurance

This type of policy pays out after the first spouse dies and helps financially support the surviving spouse. Once the policy company pays out the death benefit, the policy is no longer in effect. Therefore, if the surviving spouse desires life insurance, they must apply for a new policy.

First-to-die policies are best for people who have:

• Large debts, such as a mortgage
• Expenses largely paid by one spouse
• Young family members

Second-to-die life insurance

This kind of policy pays out the death benefit after both policyholders pass away. There can be a long period between these two deaths, and the surviving spouse is responsible for paying premiums even after the first spouse’s death.

Second-to-die policies are best for people who want to:

• Pay inheritance taxes
• Cover estate taxes
• Leave wealth for heirs

Best types of life insurance for couples

A term life insurance policy might be the best policy for a young couple starting out. Each individual can get their own policy, or in some cases a joint policy can be purchased for a lower premium.

A permanent life policy can help provide more options as you get older. You can draw against the cash value of your policy to help pay off a mortgage, send a child to college, fund a wedding, or go on a vacation.

Some companies also offer the possibility of adding riders, which can increase the death benefit. An accidental death benefit provides an extra sum of cash in case your death is caused by an accident. A waiver of benefits for disability can help ensure your premiums are paid even if you can’t work.