Joint Term Life Insurance Explained

First of all, what is “Term Life Insurance” ?

Term Life Insurance is where you take out a policy to cover a death of the insured for a set period – the Term. These are typically used by people who may have a mortgage, or other large repayment commitment, and require coverage to make sure that during the period of the commitment the payments are covered in the case of death. Once the Term insurance is finished you do not get any funds in refund for not making a claim against the policy nor do you get a surrender value.

Once you stop paying the premiums of a term life insurance policy, or joint term policy, the policy will be cancelled and you will not be entitled to any refund.

Joint Term life insurance, as the name implies, is where two people are listed on the policy and payment is made if one of them dies or is unable to work. Traditionally the couple on the policy would be man and wife and the policy is created to cover a joint liability (eg a mortgage, income replacement, or other such large domestic cost).

Once claim payment has been made on a joint term life insurance policy the policy is terminated, premium payments are no longer required, and the surviving partner should sign up for a another single term policy if they have on-going commitments that the original joint policy did not cover. Some life insurance companies will provide a window of time where the surviving insured can apply without proving current health and avoid underwriting.

Can I cash in a joint term policy ?

Traditionally – no you cannot. It is used purely as death benefit coverage.

Can I transfer a joint policy to a single person’s term policy ?

Most insurance companies will allow you to convert a joint term policy into a single term policy, providing that both parties are willing to do so. This is mostly used in the case of divorce, or separation where both of the insured’s agree to separate the policy into two policies however beware that there are life insurance companies that do not allow this type of change.

If my partner and I have a mortgage must we use a joint term policy ?

Not at all. If you wish to take out a single term policy just for you (or two policies – one for each of you, you are free to do so). However you should consider some of the pit falls of a joint term life insurance policy.

All policy features are based on equivalent single age this is when the life insurance company calculates a combined age which is higher the then oldest insured. i.e. conversion and termination date.

If one insured is ill and would not qualify for a new policy the healthy insured may have to renew at the higher rate in order to maintain the coverage for the insured that is ill.

Solutions Financial is a Canadian owned and operated life insurance brokerage.

 

 

Hobbies that may make your Life Insurer Squeamish

Things like smoking or having a high risk job will affect your life insurance policy – namely the premiums will be higher in relation to the risk you take. Most people, however, do not think of their hobbies when they take out a policy (or their policies when they take up a hobby). However some activities that you perform as a hobby in your spare time will make your insurance company very nervous. An obvious example;  having “skydiving” as a weekend hobby will affect your policy – It will cost you a lot more than someone who doesn’t go skydiving as you have a greater risk of being killed while enjoying this hobby.

Failure to inform your life insurance company of a potentially dangerous hobby could result in the company not paying out in the event of a death while partaking in that hobby, or as an effect of that hobby.

So what hobbies do life insurance companies consider high risk ?

  • Skydiving (as mentioned),
  • Bike, Boat, or motor vehicle racing,
  • Bungee Jumping (as a continuous hobby – not just a one off),
  • Hang Gliding, hot air ballooning, or any form of flying,
  • Parachuting,
  • Rock, or other forms of climbing (buildings, bridges, etc etc),
  • Scuba diving, or any form of deep diving,
  • Surfing, both normal and wind surfing,
  • Skiing, or snowboarding racing.

There are other hobbies not listed above, so you are advised to consult your insurance company when applying for life insurance if you have a hobby that is considered unusual, or involves anything that may be fatal.

Most people tend to tend to forget these activities when applying for a life insurance (Failure to do so could invalidate your policy, resulting in no payment in the event of a serious accident causing death), particularly in the case of hazardous activities. If you were a regular parachutist when you took your policy out at the age of 25, but stopped doing the activity a few years later, you should contact your insurance company and have the details of your policy reviewed (with parachuting being removed) – You may find your premiums drop considerably.

If your insurance company are uncomfortable with your hobby (either at the start of the policy) you can usually find specialist insurers who offer coverage for your hobby. Check with other people who do the same hobby, or with the club you attend to find the name of a suitable insurer. Obviously the premiums for these policies will be higher than regular policies.

The bottom line is, if you do anything that may put your life in danger, either at home or at your job, you should consult your broker to make sure you have sufficient coverage from your life insurance policy.

Does my job affect my life Insurance ?

Life Insurance companies are in the business of making profits from the policies that they sell. This means that for each policy they issue they expect to receive more premiums, and the associated investment income from those premiums, than the amount they agree to pay out upon the event of your death. If they didn’t do this they would go out of business.

This means that they have to judge and assess your lifestyle with a view to evaluating how much risk there is of you dying an unnatural or early death. The greater risk of you dying an early death, then the higher the premium the insurance company is going to charge you.

This risk is based on a set of industry wide statistics used by most life insurance companies. These statistics cover everything from what impact living in an urban area has on your expected life span, to what job you do for a living. Some of the resultant premium increases may seem a little strange, one is the effect of your job.

If you are considered to have a high risk job then your life insurance premium is going to be higher, as the chance of you dying on the job is perceived to be higher. These jobs include, but are not limited to:

  • working on oil platforms,
  • working at heights,
  • being in military service,
  • being a fisherman or pilot.

Insurance industry data suggests that these professions are more likely to cause injury or death, than being, say an accountant. (Although technically speaking, more people die yearly of heart attacks in offices than people do on oil rigs).

So what can you do if you are considered to have a high risk job?

The obvious option is to move out of the industry and get a less riskier job, but that option doesn’t appeal to everyone and is sometimes unavailable. The other option is to shop around, although there are industry wide statistics and measures available for every job available, the amount of premium charged per job can vary greatly from one insurance company to the next.

Your other option is to look for a specialist. As there are a plethora of high risk industries about today, there are a plethora of life Insurance companies who specialize in catering for employees of these industries. These companies can offer preferential rates, that are lower than those available from your regular life insurance broker. Finding one of these can be as simple as asking at your workplace, or may involve you contacting an insurance agent and asking for their assistance to find you the most economical policy for your job.

To sum up, in today’s world of tighter safety control, better work environments and safer working practises; having a job in a place like an oil refinery shouldn’t make the chances of you dying at work any greater than that of an average person crossing a busy street. Unfortunately they do, in the eyes of Insurers. And these insurers are in charge of how much premium you have to pay, so when faced with the need to have your life insured against what appears the prohibitive cost of doing so, you are best advised to find an insurance broker and let them arrange your life insurance for you.

Pilots and Life Insurance Coverage

For the most part it is a good idea for everyone to have some form of life insurance coverage. There are so many people that do not have the life insurance coverage that they need. Many of these individuals find out that the hard way that having coverage is important. It truly is the difference from being able to leave something behind to loved ones or leaving loved ones with a mountain of debt and worry. There are some people, such as pilots, that really feel they need to have the protection and security that life insurance offers. Life insurance for pilots is available. Those people that want this type of insurance must take the time to identify the companies that are willing to provide the service. Because pilots do work that some consider to be “high risk”, they worry that they will have an issue getting life insurance or feel that their insurance premiums will be high. This may not always be the case. It is best that people looking for life insurance for pilots to take the time and research various companies in order to find the ones that are willing to offer such insurance at the best rates.

Why Should Pilots Obtain Life Insurance Coverage?

Some people may wonder why should pilots obtain life insurance coverage? Well, many pilots are aware that their jobs have a certain level of risk. These individuals may love what they do, but they understand that at any time circumstances beyond their control could put them in a place where their lives are at risk. Thus, for these reasons life insurance for pilots is in fact a necessity. Life insurance for pilots provides a number of benefits to both the pilots and their beneficiaries. It really does allow pilots to have the security of knowing that their families will be provided for in case an accident of some sort takes them away from their families. Life insurance for pilots is offered in different options that will allow the beneficiaries to receive monetary benefits over time or all at once. Pilots seeking life insurance must be very clear about what is best for their families in case of their demise. In any case, it is always better to be safe than sorry. Life insurance for pilots provides the security that pilots need to be able to do their jobs or hobbies without worry.

Life Insurance Options for Pilots

There are different life insurance options for pilots. Pilots should take the time to contact a life insurance broker and inquire about the various benefits that are available for them. Life insurance for pilots is available for both commercial and private pilots. Some commercial pilots may be able to obtain life insurance policies via their employers. However, those seeking additional coverage will find that the type of flying one does will affect insurance rates. For example, commercial pilots that merely transport people between licensed airports should be able to receive standard rates for their life insurance policies. However, pilots that fly to and from non-licensed places such as flying in remote areas and those that do a lot of charter and cargo flights will find that their life insurance rates will be higher as it is more difficult to ensure the protection of a pilot in remote areas which in turn increases risk. Likewise, life insurance for pilots that fly privately is also affected by certain factors. The more experience and hours of flying a pilot has, the more likely he/she will qualify for standard life insurance rates. Young, inexperienced pilots are a risk, and this is reflected in the life insurance rates. Plus, the type of geography associated with flying is also important. Pilots that travel over mountains will be more money for life insurance than those that fly over fields. These are some factors that should be noted when applying for life insurance for pilots.

Life Insurance and Security 

Ultimately, life insurance for pilots provides a certain level of security that is highly needed. Many pilots simply want to know that should anything happen to them their families and loved ones are taken care of fully. The job of a pilot can be very adventurous. Traveling to and from to different places can be exciting. However, the other side are all the possible issues that can make being a pilot risky. Sudden changes in the weather, run way issues and terrain problems can cause disturbances that can threaten the life of any pilot. For these reasons, life insurance of pilots is something that is needed as it provides security.

In all, pilots should consider obtaining life insurance for pilots in order to have the security of protection while completing their jobs.