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Pro's and con's of a joint life insurance policy

A joint life insurance policy is where two people’s lives are covered under the same policy. Who does this? Typically a husband and wife will collaborate to buy a joint policy. If either one dies, the policy will pay out.

Why is a joint policy a good idea?

Simply… it’s efficient. Both partners can be covered under a single policy. This is usually reflected in the price – one policy is less work to administer than two policies – so the life insurer will charge a little less.

What’s the problem?

There is no problem… UNLESS there is a separation or a divorce and the situation becomes acrimonious. In order to split the policy into two policies or make changes to the beneficiaries of the policy or to change the level of cover, or make any change to the policy whatsoever, you have to have the written AGREEMENT of all the owners of the policy - elusive in the circumstances wouldn't you say? And if both parties own the policy and they can't agree, then the policy can’t be split or changed. Worse, if one party owns the policy, then they can make whatever changes they want and the other party will be severely compromised.

So, is a joint policy a good idea?

Well, you can see the problem... so you decide. Maybe its preferable to have separate policies and pay a little more for the benefit of independence. Some insurers such as Pinnacle Life do offer a discount on a second policy so it is possible to have the best of both worlds.

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