Cut Costs with Joint Life

First-to-die life insurance, or “joint life,” may be a more cost effective way for a couple to concurrently get life insurance. 

The policy pays off when the first of the insured couple dies.  It generally costs less than individual coverage because underwriting two people is cheaper than one, especially if they are in good health. 

There are not many companies that sell this product, but in today’s volatile markets, people want insurance products that offer an economical approach paired with flexibility and an opportunity for constant cash accumulation. “[T]he policy builds account value from which loans and withdrawals are available.  It gives customers the flexibility of a permanent life insurance product with living benefit features at a more affordable price to households, business owners and others.”

The coverage can also provide for an orderly transfer of a business interest.  For a family owned business, it can help those interested in continuing the business, while also providing for heirs who are not interested in the business.

However, some professionals are skeptical of first-to-die coverage.  “We might recommend first-to-die in a circumstance where we have a prosperous, relatively young and healthy couple and we want to protect estate value at the lowest cost, although, to be candid, we would probably load them up with separate term policies.”  One of the major drawbacks of joint life is that a couple can get more term insurance individually at a lower cost or they could find universal life policies for about the same price as first-to-die coverage. For high net worth families, second-to-die insurance can be used for wealth replacement or to pay taxes.

See Alan Lavine, Insuring Two Lives is Cheaper Than One, Wealth Management, Nov. 18, 2014.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.