Normally a 'first death' policy would cover both of the insured individual's lives and would pay out at the point of the death of either insured party.
In addition a 'last survivor' policy pays out at the point of the second death.
Depending on the requirements of the insurance, normally it is considered that for protecting dependants, the 'first death' option is normally the more appropriate.
Typically a joint life policy would normally only be suitable if both parties require the same level of insurance, an example where this would be useful is for paying off a mortgage, however it would be considered less suitable as a means of replacing lost income.
In Trust Life Insurance Where the proceeds of a life policy are paid to your estate on death, this will generally cause a long delay before the funds become available to the dependents.
In addition the may be an Inheritance Liability which could in some instances reduce the proceeds of any policy.
A way of ensuring that Inheritance Tax is not incurred, and there is no delay is by writing the insurance policy in trust.
Effectively what you are doing is nominating who the beneficiary of the policy will be at inception, this can normally be done for no extra charge at the time of taking out the policy.
Life-of-Another Policies An alternative is a policy that pays out direct to someone else if you die.
If you are looking to ensure that your husband or wife or partner is financially secure if you were to die, there are two main options.
As previously discussed an own-life policy would need to be written under trust to ensure that your partner receives the full amount of the policy.
The alternative is as follows: Life-of-another policy: Your husband, wife or partner can take out a life insurance policy based on your life.
If you are to die, then the policy pays out directly to your partner, so there would be no need to write the policy in trust.
A general requirement with all types of life insurance policies at the time of inception is that you must have what's known as an "insurable interest" in your own life and that of your partner.
Normally your insurable interest is limited to the amount that you would potentially lose if they died.
Therefore, a life-of-another policy cannot be taken out on someone with whom there is no financial connection.
There are some drawbacks to these types of policies, and the main disadvantage of these types of policies is if the relationship changes or breaks down your former wife, husband or partner owns the rights to the policy, and providing they continue to meet the premiums required they continue to own the policy and will therefore be able to claim under the policy if you were to die.
Waiver of Premium Option "Waiver of premium" is effectively the ability to suspend your monthly (or otherwise) premiums for a pre-determined period of time.
An example of where this could apply is if you were unable to attend work due to illness.
There would normally be exclusions relating to this part of the policy, therefore it is recommended that you fully understand all of the exclusions and related terms prior to proceeding with the policy.
Not all insurers and policies offer the waiver.
With they do, the waiver is sometimes automatically included and sometimes an optional extra.
In the examples researched it increased premiums by around 5%.
This is considered to be a cheap way of ensuring that your life cover would continue if you were not able to generate income.