Joint life insurance for couples

“What’s mine is yours” is a heartwarming notion of married life that can also be applied to life insurance. Couples can get a joint life insurance policy — but keep in mind that it’s not always cheaper or the right decision for everyone.

What is joint life insurance and how does it work?

Joint life insurance is a single policy that covers two people, meant for married couples. It’s similar to traditional life insurance in that you’ll choose your coverage and make a single monthly payment for premiums. And it’s available as either a permanent or term policy.

What are the different types of joint life insurance policies?

There are two types of joint life insurance policies: First-to-die life insurance is meant to protect your heirs, while second-to-die life insurance helps the surviving spouse maintain their way of life.

First-to-die life insurance

After the first partner dies, this policy pays out to the surviving spouse to support them financially once they’re on their own.

First-to-die joint life insurance can often have cheaper premiums than two individual policies since there’s only one payout at the end. But this isn’t a hard and fast rule. If the surviving spouse has to buy new coverage after the other dies, it can potentially cost more in the long run.

Second-to-die life insurance

Also known as “survivorship policies,” second-to-die policies are paid out after both partners pass away. They primarily serve to protect the beneficiaries you leave behind, like children.

Sometimes, couples choose a second-to-die plan so their inheritors can more easily pay high estate taxes after they’re gone, in order to keep valuable assets in the family.

However, second-to-die policies take longer to pay out since both parties have to die. And if the survivor needs the money to live on after the first half passes away, they won’t have access to that coverage.

How to buy joint life insurance

Most major life insurance companies offer at least one type of joint life insurance. You can purchase a policy directly through the insurer, or enlist an agent or broker to help you narrow down your options.

These are the basic steps:

1. Decide on a policy type. With your spouse, make a choice between first-to-die or second-to-die life insurance.
2. Figure out how much coverage you need. Depending on your budget and needs, you can buy a policy worth as little as $50,000 or as much as $1 million or more.
3. Shop around. Compare policies and prices from a handful of insurers to get the best possible coverage for the lowest possible price.
4. Apply for a policy. Once you’ve settled on a policy, follow the insurer’s steps to apply for a policy. This typically involves filling out a health questionnaire and taking a medical exam, and many insurers allow you to complete part of the application online.

Who should get a joint life insurance policy?

A joint policy might make sense in these situations:

• Both partners are in good health. If your overall health levels are equivalent, it can make sense to get a policy that covers both of you. But if one person has poor health — or smokes, for example — it can increase the premium for both of you.
• You don’t need two death benefits. If your debts are paid, savings are stable and beneficiaries are largely independent, you might not need two full policies.
• It’s cost-effective. You can save in underwriting fees if the insurer can file one policy for two people. And if you opt for a second-to-die policy, you could be quoted a lower monthly payment.

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When to avoid joint life insurance

In these cases, you might be better off purchasing an individual policy:

• One partner is in poor health. If one spouse has a preexisting health condition or complex health history, that could drive up the premiums for a joint policy. This means the healthier spouse could end up paying a lot more for coverage than if they’d taken out an individual policy.
• Your beneficiaries need the death benefit right away. With survivorship policies, the death benefit is paid out when both spouses die. Depending on when the second spouse passes away, your beneficiaries could potentially wait years or decades to receive the money that was left to them.
• You might get a divorce. A joint life insurance policy can get messy during a divorce. To protect yourself if your marriage falls apart, ask your insurer about adding a rider that splits the joint policy into two individual policies in the event of a divorce.

Can you take out a life insurance policy on your spouse?

There are a few conditions to take out life insurance on someone else. First, you’ll need to prove you have an “insurable interest” — in other words, that you’d suffer financially if your spouse died. And secondly, your spouse has to be involved. They’ll have to give consent and sign off on the coverage, and go through the entire underwriting process.

If you apply for a policy on your spouse’s behalf without their knowledge, that’s a type of life insurance fraud.

My spouse is a stay-at-home parent. Do they need life insurance?

Maybe. While stay-at-home parents may not bring in any income, they do perform unpaid labor that would need to be replaced if they passed away — like childcare and driving the kids around. For this reason, non-working parents can often qualify for the same level of coverage as their spouse.

What happens to my joint life insurance policy if I get divorced?

There are three ways to deal with a joint policy after divorce, and you’ll need to decide on an option as a couple:

1. Keep the policy as-is, figuring out a plan to fairly manage the monthly premium. Couples with children as dependents may prefer this route.
2. Transfer the policy to be under only one name. In this case, the other party would be left to find coverage on their own.
3. Cancel the policy altogether and assume any additional fees for doing so.

Can I buy a joint life insurance policy if I get remarried?

Yes. You can take out a first-to-die or second-to-die policy with your new spouse, and the purchasing process is the same. If you already hold a joint policy with your first spouse, that won’t be affected.

Bottom line

Joint life insurance can be a good option for couples hoping to share everything — and potentially cut costs while doing so. But actual savings will depend on how healthy both of you are.

Compare your policy options and the costs to make the right choice for you and your family.