What Is Joint Life Insurance Works – Life insurance usually covers just one person. But if you are married, in a long-term relationship, or share a business, you can consider a joint life insurance policy. This type of insurance covers two people under one plan.
When you purchase life insurance, the coverage usually applies only to you. However, if you are married, have a life partner, or share ownership of a business with someone else, you may consider joint life insurance. This type of policy covers both individuals under one plan.
How Joint Life Insurance Works
Joint life insurance covers two people and pays out once, either when the first person dies or after both have passed away. It can help with things like paying off debts, running a business, or leaving money behind for family or charity.
Two Types of Joint Life Insurance
Some insurers provide joint term life policies, which offer coverage for a set period of time. However, most joint policies are permanent, meaning they last a lifetime and include a cash value component. There are two main types of joint life insurance: first-to-die and second-to-die.
First-to-die Policy
This pays out when the first insured person dies. The money goes to the surviving partner or spouse. If the survivor still needs life insurance afterward, they must apply for a new policy.
Second-to-die Policy
Also called survivorship insurance, this pays out after both people on the policy have died. It is often used for estate planning, supporting a child with a disability, or leaving money to a charity.
Who Can Qualify for Joint Life Insurance
Eligibility depends on age, health, and the amount of coverage you want. In some cases, a second-to-die policy can help one partner get coverage even if they would not qualify for their own policy. However, health or lifestyle risks like smoking can affect the cost or the amount of coverage you can get.
Coverage and Cost of Joint Life Insurance
Joint policies often cost less than buying two separate policies. That is because only one death benefit is paid. You may also qualify for a higher death benefit together than you would on your own.
Pros of Joint Life Insurance
- Usually more affordable than buying two policies
- May allow a partner with health issues to get coverage
- Useful for shared financial responsibilities like mortgages or business loans
Cons of Joint Life Insurance
- Limited availability from insurers
- Can be difficult to divide if you separate or divorce
- Often issued as permanent insurance, which is more expensive than term coverage
- No payout to the surviving partner with second-to-die coverage
When Joint Life Insurance Makes Sense
This kind of policy might be worth it if you want to cover shared debt, support your partner after your passing, or leave money behind for your heirs. It can also be useful if one person cannot get a separate policy due to health reasons.
Alternatives to Joint Life Insurance
- Get individual term life policies for each person
- Add a spouse rider to your current life insurance policy
- Choose guaranteed issue life insurance if health is a barrier to getting traditional coverage
Joint life insurance is not right for everyone, but it can be a helpful option for couples or business partners with shared financial goals. Compare the benefits and costs with other life insurance options to find the best fit.
