Why should couples have joint life insurance?
Quick Facts
You don’t need to be married to qualify for a joint life insurance policy; this is an option for couples, whether married or not
First-to-die life insurance provides coverage for the surviving spouse when one passes, and younger families often use it for income replacement
Second-to-die life insurance is an option commonly used for estate planning, as it only pays out after the second surviving spouse passes away
As a newlywed or a person planning to get married, it’s natural to ask yourself whether you should add your significant other to your insurance. Perhaps you’ve been in a committed partnership and are now considering life insurance for newlyweds as the next step for the future you’re planning together.
Answering the question “Why should couples have joint life insurance?” is more difficult than answering whether couples should combine other types of insurance. Chances are, you may have already added your significant other to your auto or renters insurance without hesitation. You live together and share vehicles from time to time — it just makes sense.
If you bought a home together, you would have purchased homeowners insurance in both your names. However, life insurance can be less straightforward and is less exciting to talk about than buying a new home or vehicle.
Exploring the topic of joint life insurance can bring up many questions and uncertainties. If you’re wondering whether you should have a joint life insurance policy or if you qualify, understanding some of the basics will make this endeavor less daunting.
What is a joint life insurance policy?
Joint life insurance covers two people under the same policy. This type of coverage is also known as couple’s life insurance. Broadly, a joint life insurance policy takes care of the needs of a surviving spouse or dependent after one or both partners die.
It’s important to note that while two people have joint coverage under one policy, the life insurance death benefits only get paid out once. The way that joint life insurance pays out depends on the type of policy you select.
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What are the two types of joint life insurance policies?
Life insurance is not a one-size-fits-all means of achieving financial protection. However, you and your spouse are unique, and joint life insurance policies should make sense for you.
Joint life insurance consists of two main types: first-to-die life insurance and second-to-die life insurance.
First-to-Die Life Insurance
With first-to-die life insurance, the full benefit gets paid out to the surviving beneficiary following the death of one partner. This version of joint life insurance helps replace income and maintain an equivalent or similar standard of living.
The downside to this type of payout is that the life insurance policy goes away once the benefit gets paid out. The remaining spouse must reapply for coverage to maintain life insurance protection on themself. Life insurance costs increase with age, which is one potential downside to a joint policy if the policy gets paid out later in life.
Second-to-Die Life Insurance
Second-to-die life insurance is also known as survivorship life insurance and only gets paid out when the second person passes away. Since this type of life insurance policy doesn’t provide for a surviving spouse, people often use it for estate planning, and the payout goes to the beneficiaries chosen by the couple.
Possible financial concerns second-to-die life insurance can address include:
Estate and inheritance taxes
Income-generating assets for surviving children
A means for equally distributing estate among heirs
Ongoing expenses for adult children with special needs
Unlike first-to-die life insurance, second-to-die life insurance pays out to the beneficiary or beneficiaries selected by both insured partners. Neither partner is a beneficiary in a second-to-die policy.
Common Reasons to Have Joint Life Insurance
If you didn’t want life insurance prior to marriage or when you began your partnership, you may now be considering the practical reasons for having a joint life policy.
If you weren’t sold on the idea of life insurance prior to getting married, or at the start of your partnership, you might now be considering the practical reasons for having a joint life policy.
The main advantage to couple’s life insurance is having access to funds you wouldn’t otherwise have if the worst-case scenario happens. People can apply the funds toward various needs, like paying off a mortgage or debt, handling final expenses, and managing new and existing expenses.
Paying off a Mortgage
One of the biggest ongoing expenses partners share is a mortgage. Would the mortgage get paid if you or your partner suddenly died?
A benefit of life insurance for couples is ensuring funds are available for these scenarios. A level term policy is usually the most cost-effective way to secure a large amount of coverage for a set period. You can set up a joint life insurance policy to cover your home loan for a specific number of years.
Many companies offer a specific policy for paying off a mortgage, called mortgage life insurance or mortgage protection insurance (MPI) — this is another avenue for exploring joint coverage as a couple.
Handling Final Expenses
Early preparation for final expenses is one of the most fundamental reasons for buying life insurance.
If you currently receive life insurance benefits through work, you may not have considered a joint life insurance policy.
Employer-provided life insurance is a great, low-to-no-cost way to maintain life insurance coverage for certain periods of your life. For a single person, company-provided life insurance is often sufficient. However, as an adult in a marriage or domestic partnership, having more control over your policy becomes more important.
Consider this: each time you change jobs, your life insurance starts over, meaning the amount, term length, price, and other factors can change. In addition, life insurance rates are primarily based on age and health, meaning the earlier you select the long-term coverage you need, the better.
It isn’t glamorous, but final expenses are one reason couples should have life insurance. The last thing you want to worry about is money or a life insurance coverage lapse when you’ve just lost your life partner.
Check out this term life insurance calculator for help estimating your family’s expenses in case of an unexpected death.
Managing Living Expenses
Combining lives as a couple often results in increased expenses. A practical reason to consider joint life insurance is to ensure your spouse is financially taken care of should an unexpected death occur. In marriages with only one working spouse, a plan for income replacement may be even more crucial if the working spouse unexpectedly passes. Read more on life insurance for a non-working spouse.
In families with children, childcare costs require consideration. A common assumption is that a stay-at-home parent doesn’t need life insurance because they don’t have an income they need to replace. While the stay-at-home parent is not contributing an income, they’re removing the need for child care, which would become an added expense without them filling this role.
If the primary caretaker of your children passes unexpectedly, first-to-die joint life insurance can provide financial solutions. In addition, the ability to select exceptional childcare providers is an option that joint life insurance affords you.
Conversely, the surviving spouse may need time to step into the financial provider role if the primary breadwinner dies while your children are young. Ensuring that your children, and all other living expenses, are taken care of during this time is essential.
Pros and Cons of Joint Life Insurance
Life insurance for couples is important, but joint life insurance may or may not solve your unique needs. Take a look at the pros and cons of joint life insurance below:
Pros
Joint life insurance addresses the unique financial needs of couples. A joint policy can be more cost-effective than individual policies and may be a good solution for those who don’t qualify for life insurance on their own.
Affordability is nearly always a factor in making insurance decisions. However, the bottom line regarding joint life insurance is that a joint life insurance policy is better than a no life insurance policy.
Cons
A joint policy doesn’t cover both people separately, leaving the surviving partner uninsured after the policy gets paid out. In addition, there are limitations to covering both partners on one policy that they can only access once. Re-qualifying for life insurance individually later in life is often more difficult and costly.
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Is joint life insurance offered for couples in domestic partnerships?
Domestic partners can get joint life insurance.
The primary requirement to apply for joint life insurance is a shared financial interest, such as shared debts or assets. Put simply, life insurance companies want to know your financial impact if your domestic partner were to pass away.
If you have shared financial investments or responsibilities, joint life insurance may be a good option for you.
Final Thoughts on Joint Life Insurance
Couples who want to cover both partners under one policy use joint life insurance policies. They can also use joint life policies to minimize insurance costs or protect against estate and inheritance taxes once both partners die.
Buying joint life insurance provides financial reserves to pay off a mortgage, replace a partner’s income, and take care of ongoing expenses and debts. In addition, joint life policies protect couples and their families from financial hardships in the future.
Frequently Asked Questions
What is the difference between joint life and survivorship life insurance policies?
Joint life insurance, which many consider a first-to-die policy, pays out when one of the two insured partners dies. On the other hand, the survivorship life policy, or second-to-die life insurance policy, only pays out when both insured partners have passed.
Is getting joint life insurance policies better than separate life insurance policies?
Joint life insurance makes sense for some couples but not all. A joint life insurance policy may be adequate to take care of the needs of the surviving spouse and children.
If you have young children to raise, you might consider separate life insurance policies for each partner, so both parents have active life insurance until the kids grow up.
Why should you consider a joint life policy?
Joint life policies can be more cost-effective than individual policies, making them a good choice for many couples.
You care for your partner and about the life you’ve created together. A joint life policy protects your family in the future and maintains the lifestyle and goals you’ve worked so hard to reach.
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Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.
Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states.
After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in…
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Written by
Rachael Brennan
Licensed Insurance Agent
Benjamin Carr worked as a licensed insurance agent at State Farm and Tennant Special Risk. He sold various lines of coverage and informed his clients about their life, health, property/casualty insurance needs.
Assessing risks and helping people find the best coverage to suit their needs is a passion of his. He appreciates that insurance was designed to protect people, particularly during times…
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Reviewed by
Benjamin Carr
Former State Farm Insurance Agent
