Joint Life Insurance for Couples

Eric Van Haaften Estate Planning with Life Insurance, Types of Life Insurance Policies

When it comes to life insurance, couples have a few different options. They can each purchase their own policy or opt for a joint life insurance policy.

Both choices have pros and cons, so it’s important to weigh them carefully before making a decision.

Here’s a closer look at types of joint life insurance and how it compares to individual life insurance policies.

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Should couples each buy separate life insurance policies?
What is a joint life insurance policy?
How does first-to-die life insurance cover two lives?
How does second-to-die insurance aid couples in estate planning?
Are there any disadvantages to joint life insurance?
FAQ: Joint Life Insurance for Couples

Individual Life Insurance for Couples

Married couples can purchase separate life insurance policies individually or opt for a joint policy that covers both partners.

Individual life insurance plans provide independent coverage for each partner, allowing greater flexibility and control over coverage amount, term duration, and beneficiaries.

Additionally, these policies allow you to select different types of life insurance, such as term or permanent options, based on your specific requirements.

Term life insurance provides affordable protection for a specific period, usually 10 to 40 years.

In the event of your death within this timeframe, your beneficiaries receive a payout. Once your term life policy ends, renewing or converting to permanent coverage becomes more expensive.

On the other hand, permanent options like whole and universal life insurance offer lifelong coverage and include a savings component known as cash value.

This savings account grows over time and can be tapped into with withdrawals or policy loans later in life.

While permanent life insurance tends to be pricier than term life insurance, it offers greater flexibility and benefits.

Both term and permanent policies offer living benefit riders that allow you to withdraw from your policy’s death benefit to pay for medical expenses or nursing care.

Buying Life Insurance on Your Spouse

Couples that want coverage for their spouse can choose from individual coverage purchased from an agent or employer-sponsored policy from their employer.

An insurance agent can help buyers find the best life insurance for a married couple’s needs and budget. With individual spousal coverage, premiums will be based on age, gender, health, policy type, and required death benefit.

Because term life insurance is cheaper, it tends to be more favored for young couples needing spousal coverage. Permanent coverage is often better for older married couples with more income to pay more significant premiums.

Alternatively, numerous employers provide additional spouse life insurance that is automatically accepted, which can be an excellent choice for a spouse who is ineligible for coverage.

Nevertheless, group life insurance policies have set restrictions on the maximum coverage available for spouses and become more expensive as you age.

Joint Life Insurance for Married Couples

Joint life policies are usually shared between married couples under one policy but are occasionally purchased by business partners.

Joint insurance coverage is available to couples as either a first-to-die or a second-to-die life insurance policy.

Joint life insurance covers two people and pays out when the first person dies (first-to-die) or both covered by the policy pass away (second-to-die).

Here is what you need to know about the two joint life insurance policies that are available for couples in today’s marketplace.

First-to-die Life Insurance

So, what is a first-to-die policy? As the name suggests, a first-to-die policy pays a death claim when the first spouse dies.

Married couples purchase joint life policies to protect both spouses, which pays a death benefit to the surviving spouse when their partner passes.

It is important to note that with a first-to-die life insurance policy, the surviving spouse will not have coverage after the first death.

Many couples buy life insurance to replace lost income, protect mortgages, and pay for final expenses.

So, first-to-die life insurance is suited for couples aiming to provide financial stability for the surviving spouse or dependents if one partner dies.

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Buying a First- to-die Insurance Policy

First-to-die coverage is offered as whole life or universal life and is cheaper than buying two permanent policies because the risk is shared between two individuals.

However, it’s worth mentioning that first-to-die coverage tends to be more expensive than purchasing two separate term insurance policies.

If a couple requires lifelong coverage but cannot afford or qualify for two individual permanent policies due to medical reasons, first-to-die insurance may be the better choice.

Currently, Phoenix Life and State Farm are considered the top providers of first-to-die life insurance in the market.

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Second To Die Life Insurance

A second-to-die life insurance policy is designed for married couples and operates differently from traditional life insurance policies.

This policy only pays out after the surviving spouse passes away; hence, its alternative names include survivorship life, last-to-die insurance, and joint survivor life insurance.

By utilizing this coverage option, wealthy individuals can ensure that their assets are protected and distributed according to their wishes.

One common reason why wealthy families opt for a survivorship policy is due to potential estate taxes that would be incurred upon the deaths of both spouses.

With joint survivor life insurance in place, these families can guarantee enough liquidity to cover these tax obligations without selling off assets at unfavorable prices.

To exercise more control over how the proceeds from the policy will be paid out to beneficiaries, affluent parents often establish irrevocable life insurance trusts.

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Purchasing a Second-to-die Insurance Policy

Second-to-die policies are more affordable and easier to qualify for those with medical conditions than individual coverage.

While the field of companies has undoubtedly gotten smaller, many insurance companies offer affordable survivorship life insurance policies.

Most second-to-die life policies will require continued annual premium payments until both partners have perished.

With this in mind, we have provided you with a selection of second-to-die insurance costs with guaranteed annual premiums for life.

Second to Die Life Insurance Sample Rates

Ages	Annual Premium	Death Benefit
60/60	$10,100	$1,000,000
65/65	$13,200	$1,000,000
70/70	$18,200	$1,000,000
75/75	$24,100	$1,000,000

Disadvantages of Joint Life Policies

Joint life insurance policies offer several advantages, such as lower premiums, tax benefits, and estate planning opportunities.

However, it is important to consider the drawbacks associated with joint life insurance.

Health Concerns: One drawback is that if one partner has health issues, it can impact the premiums for both individuals. Joint policies consider the health risks of both insured parties when determining the cost.
Single Payout: Joint plans cover two lives but only have a single payout. First-to-die life insurance pays out upon the death of the first partner, while second-to-die life insurance pays out only when both partners have passed away.
Divorce: Splitting a joint life insurance policy during a divorce can prove challenging. Some insurers may allow separation into two single policies, while others might not.
Rarity: It’s worth noting that joint-term life insurance policies have become increasingly rare in today’s market due to their limitations and complexities.

Therefore, individuals should carefully evaluate their needs before deciding whether to pursue this coverage or opt for separate individual plans.

FAQ: Joint Life Insurance for Couples

Can you get life insurance as a couple? Yes, married couples certainly can get life insurance. Your coverage options will include buying two separate policies, one policy with a spouse rider, or joint life covering husband and wife.

Is life insurance cheaper for married couples? The price of life insurance for couples can differ depending on factors like the policy type, age, and health. Term insurance is more cost-effective and may have options to add a spousal rider onto the primary policy for savings. Yet, if both spouses are in good health, the potential savings might not be significant.

Is it better to have joint or separate life insurance? Buying joint life insurance is cheaper than buying two policies. Yet, it only provides one payout and necessitates both partners to have identical coverage amounts, term lengths, and beneficiaries. Opting for individual policies allows greater flexibility when choosing these vital coverage options.

What is a joint first-to-die beneficiary? Joint first-to-die insurance protects both partners with one policy. If either spouse dies, the surviving spouse is the beneficiary of the death benefit. But if one partner dies, the surviving partner must apply for a new policy to keep their coverage intact.

What are the disadvantages of joint-term life insurance? Joint-term insurance policies have a few drawbacks. Firstly, if one partner passes away, only one payout is provided to the beneficiary. Additionally, even if both partners die simultaneously, only one death benefit is paid.