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For many people, getting married is more than a ceremony with vows. In addition, married couples often merge bank accounts and other financial assets or liabilities. In some states, in fact, you are equally responsible for an debts and equally entitled to any income.
One of the facets you may have considered as part of your combined financial health is a joint life insurance policy as opposed to having a separate policy for each of you. Like most financial decisions, there are pros and cons to such a move.
Joint Life Insurance Coverage and Other Discounts
While you may be familiar with life insurance in general, many married couples who have a life insurance policy when they get married aren’t aware that insurance companies often offer a joint life policy. Instead, couples often carry over their individual policies and simply change the beneficiary to their spouse.
It’s important to understand that joint policies exist. Plus, they’re often less expensive than keeping two individual policies, especially if those two policies are with different life insurance companies.
Just like having multiple vehicles insured or multiple insurance products with the same company can offer a discount, having a joint life insurance policy can cost less per month as well.
Of course, there are exceptions to this rule. If you or your spouse have significant medical issues, preexisting conditions, are much older than the other, or are otherwise considered high risk, you may find that the cost savings is either much smaller or even non-existent. In such cases, it may be a financially smarter decision to buy life insurance separately rather than jointly.
Different Types of Life Insurance Policies for Married Couples
There are two major types of life insurance: term life and whole life. Within the whole life type, there are other subtypes as well, including universal and variable life insurance options.
Whole Life Insurance
With a whole life policy, a type of permanent life insurance, you are covered until your death. The rates do not change throughout your life. Most whole life policies offer a cash value that grows over time based upon your paid premiums. If you find yourself in need of cash for your child’s education, a big purchase, or even if you’re diagnosed with an illness that requires expensive treatment, you can cash out your policy and receive a lump sum or annual payments.
Universal Life Insurance
Universal life policies, like their whole life counterparts, offer a cash value. Additionally, however, they offer a few extra benefits. You can use the cash value, once it’s high enough, to pay your monthly premiums if you choose.
Term Life Insurance
With a term life insurance policy, you are covered only for a specific time period. A term life policy is usually 10, 20, or 30 years, and your premium amount is fixed for that term. At the end of the term, your coverage will lapse. Then, you can either get a new term policy at the current rates for your current age and other risk factors, or you can simply let the policy end.
Deciding Which Type of Life Insurance is Right for You
The most important part of deciding which type of policy you need is to first understand your own situation. What are your long-term financial goals? How many dependents do you have? Someone who is the sole breadwinner in their home, with a spouse and children to support, for instance, might have different life insurance needs than a couple with no children and a dual income.
Once you know what you need, do some comparison shopping. Don’t be afraid to contact multiple companies and compare more than just their rates. Regardless of which type of policy you want, make sure to research your options to find the best fit.
Medical Exams and Questions in the Underwriting Process
For most life insurance policies, especially those with a higher value, a full medical exam will be required. This exam resembles a standard physical complete with blood work, urinalysis, and other basic tests. These tests not only confirm your honesty to the company but can also catch undiagnosed issues that could signal high risk.
Some policies do not require a medical exam; these typically have lower monetary limits, narrower pay-out parameters, or a higher policy premium to offset the higher risk the company assumes by taking on a new client who may have undetected medical conditions.
Whether an exam is required or not, most insurance companies do require you to complete a questionnaire about you and your family’s medical history, lifestyle choices such as alcohol or prescription drug use, and other health factors that the insurance company may need to know to determine your risk. This questionnaire is often done over the phone and requires about 15 to 20 minutes to complete.