Two-for-One Life Insurance

Today’s life insurance policies generally can do much more than policies of years ago. For example, joint life insurance is one of those twists on this important coverage that may not be familiar, but it may be appropriate for some families and business owners.

Comparing the Two

Joint life insurance comes in two varieties: first-to-die and survivorship life. Both types insure both spouses (or business partners) with just one policy and eventually, will pay one benefit. One pays benefits after the first death of a person named on the policy, and the other pays only after both insured people die.

The similarities are more numerous. At its core, life insurance provides basic income replacement — a necessity for most families with children to raise or assets to protect against estate and inheritance taxes. Joint life may also be less expensive than the cost of two separate life insurance policies, especially if one person has preexisting health conditions. Either type can serve as a financial legacy to loved ones and favorite charities.

Making the Choice

Its name isn’t very attractive, but its reason for being may be: First-to-die life insurance may be the most economical choice for parents of minor children. It can also financially protect a spouse who is concerned with replacing the regular income of a deceased parent or, in the case of a deceased homemaker, the care needed for younger children. And while survivorship life insurance has a more pleasant name, its purpose is just as noble: to provide financial protection for beneficiaries.

There are a couple of reasons why joint life insurance isn’t right for everyone. One is the simple reality that you and your loved ones or business partners may need more than one life insurance policy. Another reason, which most policyowners don’t realize until after the fact, is that divorce can make dividing a joint life policy difficult without a related rider.