A Joint Survivor Life Policy, also known as a Second-to-Die Life Insurance policy, is a type of life insurance that covers two people on a single policy. It pays out a death benefit to beneficiaries only after both policyholders have died. This makes it a popular choice for couples who want to ensure that their financial goals will be met regardless of who dies first.
Two insured individuals: Typically spouses or business partners.
Death benefit only after both have died: No payout occurs when the first insured dies.
Single premium: Paid once at policy inception.
Permanent policy: Coverage lasts for the lifetime of both insured individuals.
Cash value accumulation: Optional feature that grows tax-deferred over time.
Cost-effective: Premiums are typically lower than individual policies for both insured individuals.
Estate planning tool: Provides liquidity for estate taxes and other financial obligations at the second death.
Income replacement: Provides financial security for surviving spouse or partner.
Flexibility: Coverage amounts and death benefit options are customizable.
Cash value accumulation: Provides additional financial security and potential for tax-free withdrawals.
No death benefit upon first death: No financial support is provided for surviving spouse or partner if the first insured dies prematurely.
Less flexibility after issue: Changes to coverage or beneficiaries can be difficult or impossible.
Potential for premium increases: Premiums may increase based on the age and health of the insured individuals.
Limited coverage options: May not offer the same level of coverage as individual policies.
Here are some situations where a joint survivor life policy might be a good option:
Married couples: To cover estate taxes and provide financial security for the surviving spouse.
Business partners: To ensure business continuity and financial stability for surviving partners.
Individuals with health conditions: To obtain affordable life insurance coverage even if one individual has health concerns.
High-income earners: To take advantage of tax benefits associated with cash value accumulation.
Before you purchase a joint survivor life policy, it’s important to carefully consider your individual needs and financial situation. It’s also important to compare quotes from different insurance companies to get the best possible rate.
Here are some additional resources that you may find helpful: