What is a joint life insurance policy?
Joint life insurance covers two people under one policy. It pays out a single death benefit when one or both of the two people insured die, depending on the type of joint policy.
While buying an individual life insurance policy for each person is usually cheaper, joint life can be a good fit for certain married couples or domestic partners — for example, if one of them isn’t eligible for their own life insurance policy due to health or age reasons. Even business partners who want to protect their business in case one of them passes away can benefit from a joint life insurance policy.
Which are the two types of joint life insurance?
There are two main types of joint life insurance: first-to-die and second-to-die. The main difference between both is when the death benefit is paid out to the policy’s beneficiaries.
First-to-die life insurance
In first-to-die life insurance, the policy pays out after either one of the two people protected by the policy dies. First-to-die policies are rare, but may be a good option for certain individuals.
People in a marriage or partnership where at least one person isn’t eligible for an affordable individual policy due to health issues or any other reasons
Couples with shared large debts, like a mortgage
Young families
A small business ran with a partner
First-to-die life insurance is similar to an individual life insurance policy in that, after one person dies, the surviving partner receives the payout and the policy ends. The surviving partner won’t have to pay any more premiums, and there won’t be an additional payout when they die.
If the surviving spouse still wants life insurance, they’ll need to apply for a new policy on their own. They’ll likely have to pay more than they would have earlier, too, because life insurance gets more expensive as you age.
Second-to-die life insurance
A second-to-die life insurance policy, typically called a survivorship policy, pays out the death benefit once both people covered die.
Second-to-die policies are best for couples who intend to use the policy proceeds for estate planning purposes, such as:
Covering estate taxes
Leaving a nest egg for their heirs
Paying inheritance taxes
Because there can be a long period between the first policyholder’s death and when the death benefit is paid, second-to-die policies are not meant to provide financial relief to the surviving partner during their lifetime.
Most survivorship insurance policies are permanent life insurance, which means they never expire and usually come with a separate cash value account that earns interest over time.
Permanent life insurance is significantly more expensive than term life insurance, which expires after a set term and doesn’t have cash value. Unlike a first-to-die policy, the surviving spouse in a second-to-die life insurance contract is still responsible for paying the premiums after the other policyholder dies.
If you’re considering getting a second-to-die policy, make sure both partners would be able to continue making payments after the other partner dies. Otherwise, you’ll lose your coverage and forfeit the payout.
→ Read more about how life insurance works
What are the pros & cons of joint life insurance?
Pros
It can support an estate planning strategy for people with significant assets. A survivorship life insurance policy can help the beneficiaries organize and conserve their inheritance.
It can ensure continuation of business as part of a buy-sell agreement between two business partners. If one of them should pass away, the surviving partner can use the death benefit to assist with business expenses.
Cons
It can be more expensive than two individual policies. If one spouse has a medical condition or is significantly older than the other, you may pay higher premiums for a joint policy than you would separately.
It delays the policy’s payout. If your policy only pays out after you and your spouse die, your beneficiaries could wait years to receive insurance proceeds.
It complicates divorce proceedings. Though some insurers offer a rider that will split a joint policy in the event of a divorce, a shared policy still adds complexity to the negotiations.
One spouse may need to buy their own policy anyway. If one spouse still needs coverage after the other passes away, they’ll need to buy a new policy, which will cost more due to changes in age or health.
Who should get joint life insurance?
Joint life insurance is less common because most couples find individual policies easier to manage. But a joint policy might make sense for:
Couples who can’t afford or qualify for two individual permanent policies
A spouse who may have difficulty qualifying for coverage alone
Couples planning to leave an inheritance for their children
How to buy joint life insurance
The application process for joint life insurance is similar to that of traditional policies:
If you’re considering joint life insurance, it’s best to work with an independent insurance agent and certified financial planner to weigh the options for your circumstances.
At Policygenius, our licensed experts can answer your questions every step of the way, handle paperwork, and help you secure the policy that’s right for your family.
→ Read more about life insurance for spouses
Other types of permanent life insurance
Frequently asked questions
Should you get joint life insurance or individual life insurance?
Most people should get individual life insurance policies, which are cheaper and easier to manage.
Do you have to be married to get a joint life insurance policy?
No. While most people who buy joint life insurance are married couples, domestic partners and even business partners can also get coverage on a joint life insurance policy.
What is the difference between a first-to-die joint policy and a second-to-die joint policy?
A first-to-die policy pays out when either person covered by a joint life insurance policy dies, but a second-to-die policy won’t pay out until both people covered by the policy die. First-to-die policies are typically more expensive.
When does joint life insurance make sense?
Joint life insurance might make sense if one spouse doesn’t qualify for an individual policy, or when you need permanent life insurance coverage for long-term coverage or estate planning reasons.
