Joint term life insurance explained

The joint term life insurance quotes available through Kanetix are for "joint first-to-die" life insurance policies. This means when you take out the policy, you are insuring two people, but the benefit is paid only once - on the death of the first of the two policyholders.

Who would want joint term first-to-die life insurance and why?

There are several instances when a couple would want to consider joint term life insurance:

  1. New homebuyers
  2. The most popular use of joint term life insurance is for mortgage protection. A joint life insurance policy ensures that upon one of your deaths, the surviving spouse will be able to maintain the mortgage and pay off other related debts. And as an added bonus, you may be able to save some money.

  3. New parents
  4. We all know children can be expensive. Joint life insurance can be used to pay for expenses like childcare or tuition costs if you or your spouse should pass away before your children are grown.

  5. Retirees
  6. Joint term life can be a great complement to your retirement plan as it provides a couple purchasing an annuity with more options. When a couple purchases an annuity usually their options are an annuity that provides monthly payments:

    • until the first partner dies (a single life annuity), or
    • until the remaining partner dies (a last-to-die annuity).

    Often couples choose the latter as it leaves the remaining partner a regular monthly income. However, because the annuity has to last longer (beyond the first death) the monthly income is considerably lower then those offered through a single life annuity.

    By purchasing a life insurance policy on a first-to-die basis this means you can purchase a single life annuity (which offers higher monthly payments) without jeopardizing the income for the surviving partner. Why? Because when the first partner dies, the life insurance policy will be paid out to the surviving partner.

What time periods are available for joint term life insurance policies?

At Kanetix, we currently offer online quotes for 10, 20 and 30-year policies (referred to as Term 10, Term 20 and Term 30 respectively). Below is a brief explanation of each to help you decide which is best for you and your family.

Joint term 10 life insurance policies are intended to cover relatively short-term insurance needs. If you believe your need for insurance is less than 13 or 14 years, a 10-year policy that is renewable and convertible is your most cost effective option. This coverage is best suited for those who have teenage children and/or a mortgage on a home or vacation property that is well under control yet still needs protecting.

Ten-year policies generally represent about 65 to 70 per cent of term insurance sales in Canada. A Term 10 policy:

  • Offers an initial 10-year term premium that is fully guaranteed (that means your premium will not change over the 10 years)
  • Can be renewed when the initial 10-year term is over for an additional 10-year period
  • Is renewable until age 80 or 85 for most companies

The premium after renewal will be higher than the initial rate, however continued coverage is guaranteed and you do not require a medical exam at renewal time.

Joint term 20 life insurance policies are similar to Term 10. You still have guaranteed premium levels, but the term of coverage is for a longer period of time. The Term 20 is well suited for people with young families and/or new mortgages where:

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  • The insurance need is likely to be 15 years
  • Level premium rates are desired for at least a 20-year term and the option to renew is available

Joint term 30 life insurance policies offer guaranteed premium levels, but for 30 years rather than 10 or 20.

  • The insurance need is at least 25 years
  • Level premium rates are desired for at least a 30-year term
  • Is renewable until age 100 for many companies

Simply speaking, if you need two people to pay for your mortgage, provide for your children, or maintain your retirement lifestyle, then joint term first-to-die life insurance may be for you.

If a joint term 'first-to-die' policy is for you, then complete a quote online at Kanetix. We'll introduce you to a licensed representative so you can go over your family's life insurance needs.


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