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Joint Life Insurance Problems: 5 Possible Issues That May Arise

Updated: August 17, 2018

While there are some advantages to joint life insurance, it is often riddled with problems for couples down the road.

Joint term life insurance sounds like a great idea, but couples who no longer get along will have problems with their policy.

If a couple separates or gets divorced, it is complicated to figure out what will happen with the joint term life insurance policy.

Most of the time, the spouse in charge of the policy stops paying the premiums and both individuals are left with no coverage.

Here is a detailed look at five problems associated with joint life insurance.

Only One Payout in a Joint Life Insurance Policy

A joint life insurance policy will only provide one pay out, and this is one of the biggest joint life insurance problems.

If both individuals on the policy were to pass away, their beneficiaries would only get one payout.

While it is sufficient in some cases, a single payout is not ideal if both parents happen to pass away in a similar time frame. For example, a couple might die during a car crash. While this is a morbid thought, it is something that happens in many instances.

If both individuals on the policy were to pass away, their beneficiaries would only get one payout. This complicates things if both individuals’ families were expecting the money from their life insurance policy.

The two families would have to split the policy 50-50, which decreases the overall payout for each family.

If a couple is leaving their joint life insurance policy for their children, a single policy between them is not a major issue. But if they have beneficiaries who are not directly related to the other spouse, it can cause a lot of problems and confusion for those who are left behind.

Joint Term Life Insurance Policies Are Not Split

It is not possible to split a policy when a couple is separated or divorced, which is another serious joint life insurance problem. While every couple would like to believe their union will last forever, a significant percentage of American marriages end in divorce.

While it is not the worst thing in the world for couples who get divorced after a few years, this can pose problems if the couple was married for many decades.

Joint life insurance problems arise when the couple is no longer together. They cannot simply split the policy and make it into two individual policies. The couple would either continue paying for the policy, or let it run out and get completely new policies as individuals.

While it is not the worst thing in the world for couples who get divorced after a few years, this can pose problems if the couple was married for many decades.

Two people may have gotten a joint life insurance policy when they were in their 40s. They would have gotten a great rate for plenty of coverage. However, their marriage falls apart when they are in their 60s and they now want separate policies.

They would have to pay a much higher premium rate to get a similar payout from their new policies.

Complications Associated with Remarriage

Another one of the joint life insurance problems involves the possibility of one or both of the spouses getting remarried in the future.

They would probably need to get a new policy, which means they would be unwilling to continue paying for the joint policy they got with their first spouse.

If two people divorce and are single, it is possible they will continue paying for the joint life insurance policy so they can get the benefits should one of them pass away. But if one spouse gets remarried, he or she would have a new dependent who is not related to their first spouse.

This would pose problems for any potential payout should the remarried spouse pass away. They would probably need to get a new policy, which means they would be unwilling to continue paying for the joint policy they got with their first spouse.

Instead of going through this complicated situation regarding joint life insurance, it is a lot more sensible for couples to get separate policies.

Not only does this provide two payouts for beneficiaries, but it also avoids the issues associated with a possible divorce, separation or remarriage.

Individual Policies Often Offer Better Protection

As mentioned earlier in the article, one of the joint life insurance problems is the fact that there is only one payout associated with this policy. While a couple could get a joint life insurance policy with a decent payout, it would still only provide one payment to beneficiaries.

Having two policies also gives each spouse complete control over who gets the benefits from their policy when they pass away.

In contrast, two policies come with two payouts. If a couple has more than one child, or they want to leave money for their brothers, sisters or parents, it makes sense to get the better protection associated with two life insurance policies.

Having two policies also gives each spouse complete control over who gets the benefits from their policy when they pass away.

For example, one spouse may want to leave the children as beneficiaries, while the second spouse may want to provide death benefits for a sibling or cousin instead.

If they get a joint life insurance policy, both spouses must be on the same page regarding dependents. In this situation, the sensible option is to leave the other spouse as the dependent should one of them pass away.

Best Way to Save Money on Life Insurance

Whether you are considering a joint life insurance policy, or you want separate whole life insurance policies for each spouse, it is important to find a good deal.

Individuals should make an effort to quit smoking or other habits that may cause them to fall under the “high risk category” for life insurance providers.

Getting the best life insurance policy for a reasonable price is possible, but it requires significant planning. The first step is to ensure both spouses get a policy when they are in their 30s or 40s. This is the best age to get a whole life insurance policy for a reasonable monthly premium.

In addition, it is important to avoid as many unhealthy habits as possible. Individuals should make an effort to quit smoking or other habits that may cause them to fall under the “high risk category” for life insurance providers.

Make sure you get a policy from a reputable company that has been in the life insurance business for at least one or two decades. Trusting a new company for life insurance is a reckless decision.

While it is tempting to get a cheaper policy from a relatively new company, you must remember that you will get no benefit if the company goes out of business before you pass away!