What is joint life insurance?

Answer 1

Survivor Life, also called second to die, is a type of life insurance that allows you to insure two or more people on one policy. When three or more are on the policy, it is generally being used by business partners, and the insurance benefit will be paid out when the last insured person dies. This allows the beneficiaries the money to either buy out the business or hire new individuals to run it. When the insurance is on a married couple, the purpose is to create a legacy for children or for a favorite charity whenever the 2nd (or last) insured dies.

Answer 2

There are 2 types of joint insurance: joint first-to-die and joint last-to-die. As the name implies, the former pays a death benefit when the first person passes away, while the second pays when the last person dies.

Joint first-to-die is suitable for younger couples who have a mortgage that they want paid off so that it doesn’t burden the survivor. It’s also used in a business setting for the surviving partner to buy the shares from the deceased shareholder.

Joint last-to-die is used for older couples for estate planning such as paying the terminal tax on the second death. Usually, assets rollover to the survivor tax-free and so the tax liability is only due when the survivor passes away.