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“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.
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.
There are two types of joint life insurance policies: First-to-die and second-to-die. While the former is concerned with protecting heirs, the latter can help a surviving spouse maintain their way of life.
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.
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.
A joint policy might make sense in these situations:
In these cases, you might be better off purchasing an individual policy:
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.
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.
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