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- Joint life insurance is a type of life insurance for two people where both are covered under a single policy.
- There are two types of joint life insurance: first-to-die and second-to-die.
- Joint life insurance policies can be level term, decreasing term, increasing term or whole life.
- You do not have to be married to get joint life insurance — business partners and domestic partners can also get a policy.
Joint life insurance is a type of life insurance for two people where both are covered under a single policy. Joint life comes in two varieties: first-to-die, which pays out to the surviving spouse after the first dies; and second-to-die, or survivorship, which pays a death benefit to the beneficiary after both spouses pass away. Understanding what joint life insurance is, how it works, who it’s best for and how to get it can help you decide if this option is the best choice.
What is a joint life insurance policy?
Joint life insurance is similar to standard life insurance except that it is specifically designed to cover a couple instead of an individual. Although joint life insurance for spouses is most common, the two people insured under the policy do not have to be married. The policy will pay out either after the first person dies or after both people have died, depending on if the policy is first-to-die life insurance or second-to-die life insurance.
Within joint life insurance, you will have the following policy options:
- Level term: This policy type is active for a predetermined amount of time. During this time, your coverage amount and premiums would stay the same.
- Decreasing term: Your monthly premiums and payout amounts will decrease until the end of the predetermined amount of time during which your policy is active.
- Increasing term: Your monthly premiums and payout amounts will increase until the end of the predetermined amount of time during which your policy is active.
- Whole life: Unlike term insurance, this policy type is active for your whole life and pays out whenever you die.
Types of joint life insurance policies
First-to-die life insurance
With first-to-die, the policy pays out as soon as the first person dies, with the surviving second insured the death benefit beneficiary. The primary goal of this type of joint life insurance is similar to individual life insurance. It is often used to compensate for the lost income of a spouse or partner who dies. With the loss of one individual in a dual-income household, first-to-die policies payout to the survivor so that they have finances on hand in their time of need. If you’re looking for first-to-die life insurance carriers, there are many competitive life insurance providers to choose from.
Second-to-die life insurance
Second-to-die policies make their payout after both of the insured persons have died. This benefit is paid to their beneficiaries. Unlike first-to-die, this type cannot provide a payout to either of the two people who are covered by the plan. Second-to-die, instead, is geared towards their beneficiaries. One of the upsides of doing it this way, instead of using two individual life insurance plans, is savings. You not only save money on the premiums, but the death benefits are also still tax-free.
In short, first-to-die is designed to help the surviving member of the insured couple, while second-to-die is purely for beneficiaries and cannot payout to the two who are insured.
Who should have a joint life insurance policy
Dual life insurance may be right for you if:
- You can’t afford to buy two separate policies: A joint policy may be a cheaper option than purchasing two separate policies. However, if one spouse has high-risk medical issues, a joint policy might be around the same amount as two policies.
- One spouse was or may be denied coverage: If one spouse was denied coverage, you may still qualify for a joint policy — but keep in mind that it may not be cheaper than purchasing your own policies.
- You want to leave an inheritance for your children: If your children are grown but you’d like to leave them money after you pass, a second-to-die policy may be right for you.
- You are the parent of a special needs child or another lifelong dependent: If you will take care of a dependent for the rest of your life, you and your spouse may want to leave this person a large sum of money to take care of their needs after your death. A first-to-die policy can help the surviving parent continue to care for the dependent, while a second-to-die policy can ensure continued care by someone else after both parents pass.
Pros and cons of joint life insurance
Joint life insurance for partners may be a good fit for some, but it’s not the best choice for everyone. Two-income partners could save on a joint policy if they’re young and healthy, but if one partner has health issues, it may be cheaper to get two individual policies. If you want to leave a legacy, a second-to-die policy may enable you to do so. However, you could wait a long time for a payout, joint policies aren’t typically easy to split and the surviving partner may need to purchase life insurance after a first-to-die policy is paid out, costing more in the long run.
Pros and cons of joint life insurance
Joint life insurance provides you and your partner with peace of mind, and is often a cost effective solution to cover both parties in case of the worst case scenario. However, joint life insurance isn’t necessarily the right option for every situation, and it’s worth considering both the benefits and the potential pitfalls before making a decision with your partner.
|Young and healthy couples may save with a single policy for both partners.
A second-to-die policy allows the surviving spouse to estate plan and access cash value (if applicable) as needed.
A first-to-die policy can help the surviving partner care for a dependent.
|A first-to-die policy could cost more in the long run if the surviving person has to buy another policy after the first person dies.
Joint life insurance can be more expensive if one partner has health problems.
You could wait many years before the policy pays out.
It can be challenging to divide a joint policy if divorcing.
How to get joint life insurance
Before purchasing a life insurance policy, consider what kind of coverage you will need, from the basics to any specific riders that may have to be added. Once you’ve determined the policy that you need, you can query insurance providers to determine the cost of coverage. Life insurance quotes will be communicated to you by your agent in person or over the phone. Many providers also provide an online portal through which you can apply and receive a quote.
Before the application can be fully reviewed, you and your partner will likely need to submit to an insurance medical exam. This helps the company to determine eligibility and premium rates. After this, provided there are no unexpected problems, all that’s left for you to do is to receive your policy and make your first payment.
Frequently asked questions
The best life insurance company will differ for every buyer. To find the best provider for you, start by determining the type of policy that you need. You can then speak with a licensed insurance agent, who can help you determine which company can best meet your policy requirements and provide a plan that fits your budget. You can compare joint life insurance quotes to find what works best for you.
No, joint life insurance does not pay out twice, it only pays out once. If you have a second-to-die policy, your insurance will pay out to your heirs after both policyholders die. If you have a first-to-die life insurance policy, your policy will pay out after the first partner passes away. The second partner will no longer have any life insurance in force and may need to get coverage if they still have a life insurance need.
No, you do not have to be married to get joint life insurance. To get a joint life insurance policy for two people who aren’t married, you just have to prove that you have shared assets with the other party. Business partners and domestic partners are also able to get joint life insurance. If you’re interested in dual person life insurance, it may be a good idea to determine what proof the insurer needs in order for you to qualify for this type of policy.