Married couple life insurance, or joint life insurance, is an insurance policy that covers two people instead of one. It’s best used for estate planning1 or covering spouses who don’t qualify for their own policies. The two types of joint life insurance are first-to-die and second-to-die, or survivorship life insurance.
A first-to-die life insurance policy pays out the death benefit when the first of the two spouses passes away, but a survivorship life insurance policy pays out the death benefit only after both policyholders die.2
Life insurance for newlyweds Getting married is a major milestone in life, one that should prompt you to update your beneficiaries on your retirement accounts and life insurance policies, and to reexamine your life insurance coverage to make sure both of you are carrying the right amount. If your spouse becomes your beneficiary, a life insurance policy will protect your spouse from financial burdens like outstanding mortgage payments or the loss of your salary should you pass away prematurely.
Most joint life insurance policies are long-term policies, such as whole life, universal life, and variable universal life, which can be structured to last your entire life and often accumulate cash value. However, some joint life insurance policies are term life insurance policies, which last for a set period. Learn and compare to determine which life insurance products are right for you.
How does joint life insurance for married couples work?
- Survivorship life insurance Also called second-to-die life insurance, this pays out when both spouses have died. It’s generally used by wealthy couples who want to make sure heirs, such as adult children, have money to pay estate or inheritance taxes.2 New York Life also offers a rider or optional feature on this policy that pays out upon the death of the first spouse. The surviving spouse can use the money to pay off a mortgage balance or other debts.
Benefits of joint life insurance
A survivorship life insurance policy delays the payout of the death benefit. But it can be a useful estate planning tool or a coverage option for a spouse in poor health. The death benefit can provide financial support for lifelong dependent children or be used for charitable giving.
Estate planning If you have a large estate and want to leave a tax-free legacy for your heirs, survivorship life insurance is a good option. The policy’s main purpose is maximizing your estate and distributing the death benefit free of federal income tax.
By law, spouses can leave each other unlimited assets without incurring federal income taxes, but the same tax exemptions do not extend to other beneficiaries. A survivorship life policy allows beneficiaries who are not part of the couple, like children or nieces and nephews, to receive a death benefit and use the proceeds to pay estate taxes.
Caring for permanent dependents If you have dependents who will be relying on you indefinitely, such as children with disabilities, a survivorship life insurance policy ensures that you’re leaving money behind so they can be taken care of for the rest of their lives. The policy can be used to fund a special needs trust for a dependent, so there will be income for the dependent’s support when both parents are no longer around.
Charitable giving Survivorship life insurance policies are best purchased as permanent policies because they tend to serve permanent needs. And since a survivorship policy costs less than two individual permanent policies, it’s an option to leave a larger nest egg for your heirs or for a favorite cause, allowing you to support a charity you care about long after your death.
Business transition planning The death benefit from a survivorship life insurance policy can be used to buy out members of the family who are not interested in maintaining a stake in a family business.
Advantages of joint life insurance for married couples
Cost Since one survivorship universal life policy covers two people, it generally costs less than two separate policies.
Covers you both If a married couple wants a life insurance policy but is unable to secure coverage for one of them (usually due to poor health or an underlying medical condition), a joint policy covers them both under a single policy.
Builds cash value When you pay your premium, a portion covers the cost of life insurance and policy expenses, and the remainder is applied to the cash value. The growth in cash value is federal tax-deferred, and over time it can be accessed for a variety of personal needs3.
Customizable You can customize your policy by purchasing riders, which can allow the actual coverage to fit your situation.
