What is Joint Survivor Life Insurance?
Joint survivor life insurance is life insurance that covers two people and only pays out the death benefit when both insureds (i.e., survivors) die. It might also be called a joint life and survivor policy, survivorship life insurance, or a second-to-die policy.
Joint vs. individual life insurance
If you get life insurance through your employer, you’re in a group life insurance plan.
If you buy life insurance on your own, though, you’ll have the option to choose between an individual or a joint policy. An individual policy covers one person, as you’d probably expect. You can buy this type of life insurance on yourself or on another person in whom you have an insurable interest, like a spouse or a business partner.
If you’re thinking about buying life insurance on both yourself and another person, you might want to consider joint insurance. This is life insurance that covers two people with shared assets. So, again, it could cover spouses or business partners. Joint life insurance policies may cost less than two distinct life insurance policies, but they only offer the single death benefit.
When joint life insurance pays out
If you buy individual insurance, the life insurance company pays out the death benefit when the insured dies. So if you buy life insurance on yourself, it pays out when you pass away.
But if you buy joint life insurance, you have to decide what will trigger the payout:
First-to-die joint life insurance. With this type of policy, the death benefit gets paid to the survivor when the first insured dies.Second-to-die joint life insurance. Joint survivor life insurance is second-to-die insurance. In this case, the policy doesn’t pay out until both insureds pass away. That means that the insureds need to name a beneficiary or beneficiaries to receive the policy benefit when they’re both gone.
Joint survivor life insurance can be a good fit for people who feel comfortable taking over the other person’s financial responsibilities should they die, but want to leave money behind once they’re both gone. Parents might choose a joint survivor life insurance policy and name their children as its beneficiaries, for example.