Joint Life Insurance
If you’re married and looking for a way to lower your life insurance costs or want a way to protect your estate from taxes when you die, joint life insurance may be the best way to achieve either of those goals.
Buying a joint life insurance plan is not as typical as buying individual life insurance policies, joint policies were created to enable 2 people, generally spouses, to share in one life insurance plan. Joint life insurance comes in 2 different forms: first-to-die, which pays the surviving spouse after the first spouse passes away; or in the form of last-to-die (or survivorship), which pays a death benefit to the heirs after both partners are gone.
The above joint insurance options are usually used for different purposes. First-to-die is a good option for young couples with children – it can be used to replace lost income or services provided by the deceased parent. Last-to-die is often used to pay estate taxes and/or to give money to your children.
Customers can buy a joint policy as a term life insurance, covering just a certain number of years, or as long-lasting life insurance, protecting one or both spouses for an whole life time. The most typical way joint life insurance is offered is as a permanent universal life, with a “cash worth” savings component that increases over time.
If a couple decides on a one million dollar joint survivor policy, they can expect it to be about 20% cheaper than 2 individual $500,000 life policies but premium savings vary depending on a person’s age and health. A joint policy may or may not be a lot cheaper than 2 individual plans, but its definitely worth checking.
If there is any possibility that you might divorce at some future date, this may not be the policy for you.
In case a couple decides to divorce while a joint policy is in force, there can be the loss of this plan. If children are involved, you may still want to keep it, but it is something to think about.