From the Learning Center

What Is a Joint Life Insurance Policy and How Does It Work?

By the Bestow Team·March 18, 2022·5 Minute Read

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Couples can do all sorts of fun things together. If you are in a partnership, you can ride a tandem bicycle together or take a cheeky holiday photo in matching pajamas. And as a dynamic duo, you’ll probably share some serious moments together too — like opening a joint checking account or purchasing life insurance. 

For most people, buying life insurance as a pair looks like purchasing separate individual policies. But there is another option: joint life insurance. A joint life insurance policy is a life insurance policy that covers two people. 

If you are married or in a long-term partnership, you might consider purchasing a joint life policy to cover both you and your partner. 

If you haven’t heard of joint life insurance, that’s understandable. Joint life policies are not as commonly purchased as individual policies, and not every life insurance company offers joint life insurance. 

How Do Joint Life Insurance Policies Work?

A joint life insurance policy can be purchased to cover married couples, domestic partners, and business partners.

Like all life insurance policies, a joint life insurance policy provides chosen beneficiaries with a death benefit should the insured pass away. However, the way that death benefit payout is delivered depends on the type of joint life insurance policy you have.

The Types of Joint Life Insurance Available

The two most common types of joint life insurance are first-to-die life insurance and second-to-die insurance (also known as a survivorship policy). 

First-To-Die Insurance

First-to-die insurance can be sold as a permanent or term policy, though even on a permanent first-to-die policy, the joint insured (known as a rider) has a term. Each insured person can name their own beneficiary. With first-to-die life insurance, the policy pays out after the first of the insured passes away. 

First-to-die joint insurance can offer some financial protection for the surviving insured partner if they are named as a designated beneficiary. If the first person to pass away is the primary insured, most insurance companies will offer the rider an option to convert their policy into an individual policy with the same death benefit and underwriting class.

Second-To-Die Insurance (Survivorship Policy)

A second-to-die joint life insurance policy, also known as last-to-die insurance or a survivorship policy, is typically a permanent life insurance policy that pays out a death benefit only when both of the insured people have passed away. 

When the first insured person on a second-to-die joint policy dies, the policy remains in force until the second insured’s death, at which time the death benefit is paid out to the named beneficiaries.

Do You Have to Be Married to Have a Joint Life Insurance Policy?

When underwriting joint life insurance policies, most insurers look for shared assets and insurable interests, not marriage certificates. 

Married couples, domestic partners, and business partners can qualify for joint life insurance policy.

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Joint Life Insurance Policy vs. Individual Life Insurance Policy

Here are some things to consider when comparing joint life insurance to individual life insurance:

Cost: If you are thinking about purchasing permanent life insurance, a joint life insurance policy can be less expensive than buying two individual permanent policies. On the other hand, two term life insurance policies might be less expensive than one joint life policy.

Duration: When the primary insured person on a first-to-die policy passes away, the policy may expire at that point, depending on the contract. There is typically an option for the rider to convert to a permanent policy.

Second-to-die joint life insurance, on the other hand, stays in force when the first insured dies, but only provides a death benefit only when both insured parties have passed away.

If neither first-to-die or second-to-die insurance sounds like the right fit for your situation, you might consider individual life insurance. With this option, each of you could buy a separate individual life insurance policy and name each other as beneficiary. That way, if one of you were to pass away insured, the living spouse would receive a death benefit without affecting their own life insurance policy.

Benefits of a Joint Life Insurance Policy

Now that you have a handle on the definition of joint life insurance, let’s explore all the benefits of sharing a policy with another person. 

Here are some situations in which joint life insurance might be a good idea:

  • You are estate planning and want to leave your loved ones an inheritance.
  • Your partner can get a life insurance loan off the cash value of your joint policy.
  • One spouse is having trouble qualifying for an individual policy.

Potential Drawbacks of a Joint Life Insurance Policy

Joint life insurance isn’t always the best choice for partners. Here are some situations in which joint life insurance might not be the right option:

  • If one spouse has health issues, smokes, or is a bit older, you will likely pay a higher premium than if you were both in good health.
  • Things can become complicated if the policyholders get divorced.
  • There may only be one payout for two people (whereas two individual policies = two death benefits).
  • Coverage cannot be personalized for each insured person.

Joint life insurance may be a good option for some married couples and business partners. For others, it might make more sense to buy two individual life insurance policies, or even just one. It depends on you, your priorities, and your financial situation. For more on term life insurance pros and cons, visit our blog. 

Finding the Right Type of Life Insurance for Your Needs

Regardless of what the internet might tell you, no one type of life insurance ranks as the best. Instead of searching for the holy grail of life insurance, try listing your family’s insurance needs and the amount of coverage you want, and then shop around for an insurance policy that makes sense for your unique situation. 

Some insurance providers offer instant life insurance quotes that allow you to play around with different policy terms, coverage amounts, and features. 

With Bestow, you can apply for term life insurance in minutes and if approved, you could activate your policy by the end of the day. The whole process is online. There are no medical exams. No lengthy phone calls. It’s just you, your device, a few clicks, and, if approved, boom — you could have coverage of up to $1.5 million in minutes.

Key Takeaways

  • Joint life insurance is a life insurance policy that covers two people.
  • There are two main types of joint life insurance: first-to-die insurance and second-to die-insurance (also known as a survivorship policy).
  • There are benefits and drawbacks to carrying a joint life insurance policy. Another method of buying life insurance for two people is to purchase individual policies.