This article is aimed at couples buying life insurance and the benefits over cost of having or arranging two single life plans rather than just arranging a joint life first death plan for both individuals.
Many people aren’t aware that it they can benefit more from having their own life insurance policy. Thought they know they need insurance, they haven’t explored all their options. If you’re thinking about getting life insurance for yourself and your partner, here’s some information that might help.
To understand this principle you first need to be aware of the choices open to you. Say for example you are a couple who need life insurance for whatever reason. Most people in this position would opt for a joint life first death life insurance plan. Joint life first death is simple in so much as the benefit is paid once in the event of the first person dying. Once this event has taken place the plan ceases and there is no cover for the surviving individual.
Alternatively, it’s possible to arrange insurance coverage as a pair of single life insurance plans. This provides benefits for both partners, regardless of when death occurs. That means that children and other dependents can expect to receive benefits if the people covered by the plans die. Individual plans aren’t affected by the death of the other partner, even if the couple is legally married.
It is quite common that when couples take out plans to insure themselves that should one of them die the other is in a position of having no life cover at all. This commonly leaves them needing to arrange life insurance as they may still have a need to insure their lives for one reason or another. If this event is sometime after taking out the original plan they will probably find that the cost of cover is considerably higher at this point due to many reason not least the fact that the life assured is that much older and more expensive to insure.
Another reason that two single plans could be the better option is due to the high rate of marriage failure. As many as forty percent of marriages end in a divorce. Relationships, since they don’t involve legal ties, have an even higher failure rate. While this doesn’t mean you should plan for your relationship to fail, the hassle of splitting assets, and separating your insurance plan – if it’s possible – is something to be avoided. While it can’t take all the hassle out of getting a divorce, two single plans will reduce it.
A common misconception is that the expense of setting up two life insurance plans is so high as to be prohibitive. This isn’t really the case, however. Arranging for two individual policies (one for each member of a couple) can cost as little as an extra ten percent more than a joint plan would have. If you pay attention to the quantity of benefits you’re likely to receive, versus the minimal extra expense, it’s clear that having a plan of your own is the better choice.
Of course, the best benefit of having two plans is the fact that you’ll get twice the benefits. A joint life insurance plan offers only one payout, then the plan ceases to exist. On the other hand, if you both have a plan of your own, these plans are independent of one another. This means that each play will pay out on its own. Since two plans cost only about ten percent more, that’s a lot more benefit in the end than cost. Financially, a pair of independent plans seems like a good idea.
To summarize, two plans – one for each individual – means not having to reapply at a higher rate if your partner dies, with the possibility of being denied insurance. It’s a more flexible arrangement than a joint plan, in case of the unfortunate event of a failed relationship, and the financial benefit compared to the cost is excellent. If you’re thinking about getting life insurance for yourself and your partner, think about alternatives to traditional joint insurance policies. This is one case where two insurance plans might well be better than one.
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