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How does a joint life insurance policy work?
Joint life insurance is a single policy that covers two people under one contract. It’s common to see joint life insurance for married couples or those in long-term relationships.
Like other types of life insurance, joint policies can provide beneficiaries with a lump-sum, tax-free payout—often referred to as a death benefit—if the policyholder passes away. Because joint life insurance is tied to two people, the payout can occur when the first or last person passes, depending on the policy.
With joint life insurance, couples usually complete one application together and the policy is tied to both individuals, sharing the same term length and coverage amounts.
It’s also common to see couples purchase separate life insurance policies at the same time for additional flexibility. These typically aren’t considered joint life insurance plans but can be linked together for additional savings.
What is joint first-to-die term life insurance?
Joint first-to-die term life insurance is a type of term life insurance policy for couples where the payout or death benefit occurs when the first person under the policy passes away. The loss of a partner can be life-altering, and this type of coverage can provide the surviving spouse with a financial safety net to cover expenses, debts, or other financial obligations during the transition period.
With joint first-to-die term life insurance, you would apply together and share the coverage. As with other types of term life insurance, the coverage is limited to a specific period—often 10 to 30 years. The policy coverage ends when the first person covered by the policy passes away or if the term ends. If a surviving spouse needed additional coverage, they would need to purchase a new policy.
What is joint last-to-die term life insurance?
Joint last-to-die term life insurance, also known as survivorship term life insurance, is a type of policy that only pays out a death benefit when both insured individuals pass away. Joint last-to-die term life insurance is designed to provide family members and loved ones with financial support when you’re both no longer around.
If one partner passes away, the surviving partner would not receive a payout and would need to continue to pay premiums to maintain coverage until the end of the term. The coverage and remaining term length would remain the same as the original policy.
Pros and cons of a joint term life insurance policy
There are many advantages and disadvantages of choosing a joint term life insurance policy.
Pros of a joint term life insurance policy can include:
- Potential cost savings: Joint life insurance policies can be more cost-effective than two identical individual policies.
- Simplicity: Having one policy means there is only one plan to purchase and keep track of.
Cons of a joint term life insurance policy can include:
- Lack of flexibility: Both insureds are usually covered for the same amount and length, which can be challenging if you have unique needs.
- Difficulty with future changes: If you were ever to separate or divorce, it can be difficult to split the policy.
- Coverage gap: With first-to-die policies in particular, coverage often ends when the first partner passes away, leaving the remaining partner without coverage.
- Single payout: You only get one payout when the first or last partner passes away, whereas individual policies can provide a death benefit for each partner.
Joint vs separate life insurance: Which is better?
Like many questions related to life insurance, whether a separate or joint term insurance plan is better for you depends on your unique situation.
Joint life insurance policies can be an ideal solution for couples with shared financial responsibilities. For example, you have a shared mortgage and share all debts and expenses. It can be more cost-effective than individual policies, and some couples prefer to keep their insurance and financial assets combined.
While joint life insurance for unmarried couples also exists, individual term life policies often make better sense for all couples due to their greater flexibility. For example, if both partners have different financial responsibilities or income, having separate policies can provide you with the flexibility to fine-tune your policy to each of your needs.
While Blue Cross Life doesn’t provide joint term life policies, we offer extra savings to individuals purchasing term life insurance plans as a couple. This means you can both enjoy the flexibility of separate coverage while still getting affordable life insurance rates.
Do you need to be married to get joint life insurance?
For the most part, no. Purchasing joint life insurance is an option for unmarried couples through some insurance carriers in Canada. While Blue Cross Life doesn’t provide joint term life policies, we offer extra savings to couples purchasing their individual term life insurance plans together—whether you’re married or not.
Joint life insurance plans are available to married or common-law partners in long-term relationships, but they aren’t always the most flexible choice. Since your coverage is tied together for the entire term, it can become complicated if your life circumstances change. As average term life rates typically increase with age, canceling and purchasing separate policies later could also prove costly.
Instead, married or unmarried couples can choose to purchase two individual term life insurance policies. With Blue Cross Life, you can link these policies for convenience and save an extra 10% on your first-year premiums.