Co-Founder, Coastal Financial Partners Group, California
Joint life insurance is usually referring to joint second-to-die which is also known as survivorship life insurance. These policies insure two lives and became popular with the advent of the unlimited martial deduction in the early 1980s. It has become a common way to provide for estate liquidity. Priced at a lower premium than two single life policies, survivorship policies pay nothing at the first death. The policy death benefit pays at the death of the second insured to die.
While readily available at one time, joint first-to-die life insurance policies are no longer available from A rated carriers that distribute through life insurance brokers.
A joint life insurance policy, or "second-to-die" or "survivorship" policy, pays the death benefit upon the death of the second person. This means that if a husband wants to leave the death benefit for his wife, he would not want to purchase a survivorship policy with his wife being the other insured person. Keep in mind that both persons on the policy must pass for the death benefit to be paid out.
A Joint Life Insurance Policy is known by a few names: survivorship, second to die and my personal favorite “last one out” (just kidding.) Survivorship was originally conceived to correlate with the Marital Deduction Act in the eighties when the law allowed the state to pass between spouses at the first death tax free, i.e. taxes then are due at the second death of a married couple. The economic leverage of survivorship is significant and can address several inheritance strategies like estate taxes, charitable giving and making a difference for your children, grandchildren and maybe your great grandchildren as our society’s life expectancy appear to be heading for age 100.
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While readily available at one time, joint first-to-die life insurance policies are no longer available from A rated carriers that distribute through life insurance brokers.