What is one potential disadvantage of purchasing separate life insurance policies for two individuals?

Purchasing separate life insurance policies for two individuals can lead to higher total premiums than necessary if only one death benefit is needed. This situation arises because each individual’s policy will require its own set of premiums, potentially increasing overall costs. For instance, if one person only needs coverage for the life of another (such as in a spousal scenario), it might be more cost-effective to get a single policy that covers both lives, often referred to as a joint policy. In contrast, having separate policies means paying two individual premiums, which could be excessive if the goal is simply to ensure coverage for one death benefit.

Additionally, the higher premiums may not equate to appropriate risk management if the insurance is only needed for one individual, making this option less efficient financially. While other choices may present valid concerns associated with separate policies, such as underwriting processes or potential tax implications, the central issue of cost efficiency stands out in option A as a significant disadvantage.