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Is there such a thing as "joint" life insurance for two people that will pay the survivor should the other one die?

In other words, I'd like to buy a policy for myself and my wife for say, $1,000,000.

If I died, she would get the benefit, if she died I would get the benefit, then perhaps if we both died at the same time, it would go to some other beneficiary that we designate.

Basically, it seems like this should be a less expensive way to buy a life insurance policy since it would only have to pay off once as opposed to purchasing two separate policies.

I read about something called a "Survivors Policy" but this seemed like it was intended more to benefit the heirs after both the husband and wife die.

  • Sounds like a good product. My wife and I have two plans, but you never know if that is a limitation of the products or the salesperson. – MrChrister Sep 20 '10 at 14:06
  • What's wrong with just buying two policies, one for each person? – fennec Sep 20 '10 at 14:36
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    Nothing wrong with buying two policies, but it seems like it would cost twice as much. It seems like if the ins. co. didn't have to pay out for two policies that you could get more for your money. – Avalanchis Sep 20 '10 at 14:43
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Yes, it's called a "first to die" policy. You are both covered as you suggest, but the policy only pays on the first death. Cheaper than two full policies, but more expensive than the standard single coverage.

  • Thanks! I knew there had to be something like this out there! Now that I know what it is called, I found some more information online: askville.amazon.com/… – Avalanchis Sep 22 '10 at 11:54
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    Excellent, thanks for the "best answer" vote. An aside, there are also the opposite, "second to die" policies. This might be right for a couple who each do well but if both died, need to take care of loved ones. – JoeTaxpayer Sep 23 '10 at 0:42
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A Joint First To Die (JFTD) policy is essentially two single policies bundled together. That’s why a death benefit can be paid on each life. Insurance policies have an administration charge built-in. With JFTD, you save one admin fee. Since actuaries love playing with numbers, they may translate the two lives into an equivalent single age, which should also lead to savings (e.g., male nonsmoker 30 + female nonsmoker age 30 = male nonsmoker 38, say).

JFTD is used mainly in the family market because of the cost savings from bundling. For larger policies, the admin fee (generally a flat amount) becomes a smaller percentage of the premium. So two single life policies are usually purchased. This gives more flexibility. For example, each spouse can have a different amount of coverage. Upon divorce or separation, the policies are already separate (may need insurance for other purposes then).

Some policies let you convert a JFTD policy into two single life policies under certain circumstances. That feature may be useful should your circumstances change.

Your advisor can help you find a good solution.

  • Welcome to Money.SE. Please be aware that leaving your email and company in a post can be seen as spam and such posts are normally handled rather harshly – rene Apr 6 '16 at 15:39
  • Good answer. Welcome to Money.SE. Although contact info is not allowed in posts, you can include contact info in your user profile, if you like. – Ben Miller Apr 6 '16 at 15:45
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It is the ideal coverage to have if you are a US citizen and your estate is large enough to be liable for federal estate taxes when you both have passed away. Why first to die? The death benefits can be paid to an Irrevocable Life Insurance Trust whose assets are apart from the taxable assets of the family. The trustee of the ILIT can then (1) invest the death benefits in a second, single premium policy, for the surviving spouse if greater coverage is needed for a growing estate, or (2) place the death benefits into an SPDA and pay the interest to the surviving spouse as a retirement supplement. The principal would then be lest for the estate’s heirs to address estate tax issues. Traditional second to die does not have these options and may cause a problem A large second to die policy in an ILIT still requires annual gifts to keep in force after the first spouse dies. This may be difficult for a surviving spouse to maintain. For estate tax planning, first to die is an excellent product.

  • you are aware you can edit your posts? – rene Apr 6 '16 at 15:49
  • Normally, you shouldn't post two answers to one question. Instead, if you have more info to add to your answer, you can edit your answer. That having been said, the info in this answer does not apply to the OP's situation, and does not belong here. I recommend deleting this answer. – Ben Miller Apr 6 '16 at 16:07

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