Married couples shopping for life insurance have two options: separate or joint policies. Most couples buy individual life insurance policies for each person. But for a minority of couples, it makes better sense to choose a single, joint life insurance policy that covers both partners.
When purchasing a joint life insurance policy, you’ll choose between a first-to-die life insurance policy or a survivorship life insurance policy — also known as second-to-die. A survivorship life insurance policy isn’t right for most couples because it delays the payout of the death benefit.
On the other hand, a survivorship policy can be a useful estate planning tool, a coverage option for a spouse in poor health, or financial support for lifelong dependent children. Read on to learn if second-to-die life insurance makes sense for you.
A joint life insurance policy provides coverage to spouses or domestic partners even if one person doesn’t typically qualify for coverage.
Couples with specific estate planning needs or parents of children with disabilities benefit most from second-to-die life insurance.
Most couples are better served by separate term life insurance policies.
What is survivorship life insurance?
Most joint life insurance policies are permanent policies. These policies last your entire life and often have an investment component called the cash value. However, some joint life insurance policies are term life insurance policies, which last for a set period of time.
Survivorship life insurance policies are best purchased as permanent policies because they tend to serve permanent needs.
What is the difference between joint life and survivorship life insurance?
Survivorship life insurance is a type of joint life insurance, along with first-to-die life insurance.
A first-to-die life insurance policy pays out the death benefit when the first of the two spouses passes away.
A survivorship life insurance policy pays out the death benefit only after both policyholders die.
How does survivorship life insurance work?
When a couple applies for life insurance, both parties go through the underwriting process together to receive their policy.
But unlike single policyholder life insurance, a survivorship policy doesn’t pay out after the first person dies. Instead, the remaining policyholder continues to pay the premiums until they pass away. Then, the beneficiaries will receive the policy’s full death benefit once both parties die.
This makes survivorship life insurance less useful as an income replacement tool. It’s usually bought to protect the financial health of future generations.
When should you buy a survivorship life insurance policy?
There are a few major reasons you might purchase a survivorship life insurance policy:
Supplying care for permanent dependents If you have a dependent who relies on you permanently, such as a child with disabilities, a survivorship life insurance policy ensures that you’re leaving money behind so they can be taken care of for the rest of their life. The policy could be funded into a special needs trust for the dependent to have some income if both parents are no longer around to support them.
Estate planning If you want to leave money or assets behind to heirs or want to allow your loved ones to avoid federal state taxes and income taxes, survivorship life insurance is a good option. The policy’s main purpose is to maximize your estate and provide liquidity.
You can’t afford two individual policies For the most part, purchasing an individual permanent life insurance policy can be five to 15 times more expensive than purchasing a term life insurance policy. But permanent survivorship life insurance policies can sometimes be less expensive in the long run than buying two separate policies.
One spouse was declined, but the other is in good health If a couple wants both partners to have insurance coverage but is unable to secure coverage for one of them (usually due to poor health or an underlying medical condition), a joint policy covers them both under a single policy.
There’s a need for the cash value of a life insurance policy Survivorship policies can be structured to help the surviving spouse through the cash value of the policy. Though the death benefit won’t pay out until both policyholders have died, some permanent policies can build up a cash value that can be accessed while one of the spouses is still alive. If the policy builds enough cash value, the surviving spouse can borrow from the policy and pay final expenses or the policy premiums, all while the policy is still active, or in force.
→ Learn more about how cash value life insurance works
Speak to a financial advisor or a Policygenius agent to figure out if survivorship life insurance is your best option.
Who shouldn’t get survivorship life insurance?
Most couples should opt for individual term life insurance policies instead of survivorship life insurance. In addition to the delayed payout that comes with survivorship life insurance, this type of policy can also be difficult to split up in the event of a divorce.
Is a survivorship life insurance policy worth it?
A survivorship life insurance will be a good option if you’re using life insurance as an estate planning tool for your heirs. Alternatively, if you or your spouse are in poor health and can’t get an affordable policy on your own, a survivorship life insurance policy will allow you both to get some coverage.
A survivorship life insurance policy isn't the best choice for people in generally good health who need life insurance to protect their income if they die. Instead, term life insurance is recommended in those more traditional cases.
You should consult with a life insurance agent to determine whether or not a survivorship life insurance policy is the best option for your individual circumstances.
Frequently asked questions
What is a survivorship life insurance policy?
This is a type of joint life insurance policy in which the death benefit only pays out once both policyholders have died. Survivorship life insurance is also referred to as "second-to-die" life insurance.
How many people does a survivorship life insurance policy cover?
Two people who share financial interests — usually spouses or domestic partners — are covered under a survivorship life insurance policy.
How are survivorship life insurance policies helpful in estate planning?
A survivorship life insurance policy’s death benefit can be used by heirs to pay estate or inheritance taxes.