Joint life insurance for couples
Reviewed by
When you commit to a relationship as a couple — married or otherwise — you both have to decide what that commitment means. Where will you live? What kind of life do you want to build together? How will you support each other – emotionally and financially?
Find a financial professional near you
Life insurance can be important source of support because it can help couples face the future with more confidence. While nothing can prepare you for the emotional loss of a spouse or partner, life insurance can help prepare you for financial loss. Most couples opt for separate individual policies, but joint life insurance can also be an attractive option for some. Is it right for you? Whether you’re newly engaged, just married, new parents, or empty nesters, this article can help you decide by telling you about:
Different types of individual and joint life policies to consider
How to take the next step and get the protection you both need
How much life insurance do you need?
One of the best ways to start learning about life insurance is by estimating how much you may want to have, and how much it costs. This calculator will provide that information in about a minute, with no obligation.
The cost shown is for a 20-year term life insurance policy for an individual of your age in good health. The suggested amount is based on the "Human Life Value" approach1, a way of looking at life insurance needs based on your current annual salary, plus what you expect to earn in the future. There are other ways to calculate your needs. You may want more or less coverage, or another kind of policy (such as a joint life policy). Having said that, 20-year term life insurance is one of the most popular and cost-effective coverages available, so it can be helpful to use that as a baseline.
Individual and joint life policies: What they are and how they work
There's a significant (and obvious) difference between these two types of policies. An individual life insurance policy covers a single person, but joint life insurance covers two people — and only two. However, it only pays a death benefit when one of those people dies (more on that below).
Individual life insurance: Choose from term or permanent protection
Term life insurance provides financial protection for a specific period of time, typically between 10 and 30 years. Term policies are sometimes called "pure life insurance" because their only purpose is to pay a death benefit if the policyholder passes away during the term. There's no cash value component to the policy — once the term ends, nothing is left.
Permanent life insurance typically costs more than term life insurance but provides financial protection that can last your entire life, as long as premiums are paid. Unlike term, it includes a wealth-building component — the policy's cash value — which helps make the policy last indefinitely while providing other potential financial benefits.2 A portion of your premium dollars can grow tax-deferred as cash value over time — but the entire death benefit is immediately payable from the first day you have the policy.3 There are two main types of permanent life: whole life and universal life. Whole life insurance is more straightforward — the premium remains the same for life, the payout is guaranteed, and the cash value grows at a guaranteed rate. Universal life insurance can be less expensive, but the premiums, payout, and cash value growth rate can vary, making the policy more complex.4
Joint life insurance: Most policies are permanent
Joint life policies are niche financial products. Not every life insurance company offers them, so you may have to look around. Even among insurers that offer joint life policies, you may not find both term and permanent life insurance options. In fact, few companies offer term joint life for the simple reason that most couples buying it don't want temporary protection: if the policy term ends before one spouse or partner dies, there's no payout.
There are two ways to structure a joint life policy
Joint life insurance coverage extends to two individuals who will likely die at different times. However, the policy only pays a single benefit. The logical next question is, "When is it paid — after the first or second death?" That's why insurance companies offer two kinds of joint life protection.
First-to-die life insurance
With this option, the payout is made after the first person dies. Younger married couples often purchase it to replace each other's earnings, with the surviving spouse named as the beneficiary. So, for example, in a household where both partners earn similar amounts, a first-to-die policy can help the survivor support their family, pay bills, and maintain their lifestyle. However, once the policy pays out, the second person has no remaining protection. If the survivor wants to continue to be insured — for example, to provide financial support for the couple's children or even final expenses — they will have to apply for a new policy at rates that will likely be higher.
Second-to-die life insurance
This option is sometimes called survivorship life insurance, and the payout is made only after the second (surviving) person passes away. So, it can't provide income replacement for the surviving partner — instead, the payout goes to the couple's beneficiaries. Why get this type of policy? It's typically purchased as a part of estate planning and can help alleviate the time and uncertainties of probate (the legal process for validating a will) while also providing:
Liquidity to pay estate and inheritance taxes
Assets to generate funds for other surviving dependents
Estate equalization among heirs
Funding for special needs children
It's important to note that the beneficiaries of a second-to-die policy don't have to be the couple's children or relatives. This type of policy can also be used to simplify the transfer of assets to a non-relative, such as a friend or business associate. For that matter, the beneficiary doesn't even have to be a person — the payout can be used to leave a legacy for a favorite charity or religious organization or as funding for a family trust.
Joint vs. separate life insurance policies
Joint married couples’ life insurance policies are rare for a reason when compared to individual policies. Before you purchase either, consider exploring all of your permanent and term life options. With that in mind, here are some joint life insurance product considerations.
One policy may be less expensive than buying two separate policies
The most popular reason for buying a joint life policy may be to get a single lower premium. Generally speaking, it costs more to buy two individual $1,000,000 policies than to get one joint life policy for $1,000,000, for obvious reasons: With two individual policies, insurance companies have a potential payout of $2,000,000, but with one policy for two individuals, the total payout is only half as large.
It can provide more cost-effective protection for young, dual-income families
Many young families only buy individual life insurance for the working spouse or partner because if that person dies, they need to help replace the income they would have otherwise provided. However, when each person earns approximately the same amount, they are equally dependent on each other's income. If either were to pass away, the other would need the same amount to maintain the family's standard of living. In this case, a single first-to-die life insurance policy may well be more cost-effective than two individual policies with the same amount of protection. It may even make sense to consider a term first-to-die product in this situation — if you can find it.
However, you should consider a permanent (whole life or universal life) joint life policy to use second-to-die coverage to provide for a special needs child or other estate planning situation. The reason is simple: if the policy term ends before the second covered person dies, no assets will be passed on to the beneficiaries.
It enables the surviving spouse to have more control over estate planning strategy
Couples often use life insurance to leave a legacy for loved ones or a charitable cause. A second-to-die life policy lets them delay the transfer of assets until both people have passed away. This can allow the surviving person to tap into the policy's cash value if needed or alter beneficiary designations if circumstances change.5
Considerations for individual policies
While joint life policies can benefit some married couples — particularly if they want to help ensure that children or other dependents are financially cared for after their passing — there are many reasons why couples may opt for single life insurance policies instead.
Each partner has sufficient coverage coming into the relationship
One of the most basic truisms of life insurance is that the cost increases with age. If each of you has a long-term or permanent policy in place with a sufficient amount of protection, you probably don't want to let those policies lapse. Consider naming each other as beneficiaries on your existing policies instead. The cost of replacing those policies with a single joint life policy may not be worth it: as older applicants, your rates will almost certainly be higher.
You choose to keep your estates separate
When older, more financially established people with children get remarried after a divorce, each partner may already have sufficient income or assets to take care of their own needs if one or the other passes away. In any case, each partner may prefer to name their children (or other family members) as beneficiaries.
The survivor may have to purchase additional insurance at a higher price
If a first-to-die policyholder passes away a decade (for example) after the policy was issued, the other gets a payout – but no longer has life insurance protection. At that point, the surviving person will be older and possibly in worse health – and premiums for a new policy may be significantly higher. If both partners feel they need long-term protection, one joint policy may not work.
If one partner has health issues, it may cost more than individual coverage
Joint life is actually a group insurance policy issued for the smallest possible group of people — two individuals. Group life insurance costs are calculated based on the average health status and life expectancy of the group as a whole. If one person is significantly less healthy than the other, premium costs will be higher. Similarly, if there is a significant age disparity, or one person has a family history of a serious medical condition — or is a smoker — policy costs for your "group" will go up.
You may be better off taking advantage of a spousal rider
If you want separate life insurance policies but still want to add coverage for your spouse or partner, spousal riders6 can be a good option for married couples. These riders are add-ons or amendments to certain existing life insurance policies, allowing the policy to extend coverage to a partner. Premiums will increase but the overall level of protection will be better than that provided by a joint policy.
Still deciding? Consider how life insurance needs may change throughout marriage
As you weigh the pros and cons of joint vs. separate life insurance policies, it's important to consider your current and future needs based on where you are in your marriage and life.
Recently engaged, young, or newly married couples, for example, often choose separate life insurance policies to help ensure the financial confidence of the surviving spouse (and any future children) if either unexpectedly passes away in their prime earning years.
On the other hand, older couples with children or other financial dependents may benefit most from joint life insurance if the goal is to help ensure their beneficiaries’ financial confidence once both spouses have passed. This is why many people choose joint life insurance to fund a trust for a special needs child.
It's time to take the next step
Is a joint life policy a good fit for you and your spouse or partner? Should you each get a separate life insurance policy? One way to start is by looking at some individual life insurance options. You can, for example, try the Guardian term life calculator or a similar online tool. If you and your new spouse or partner still believe joint life is your best option, consider speaking to a knowledgeable financial professional who can answer detailed questions about policy obligations and guide you to the right type of coverage.
If you don't have someone to discuss insurance with, Guardian can help you find a nearby financial professional who will take the time to learn about your situation and present you and your partner with options that fit both your needs.