Joint – First To Die

“First to Die” life insurance policies, also called “joint life” insurance, are policies that insure more than one person and that pay out benefits to the survivor(s) at the time of the first death of one of the insured. Once the first death occurs, the policy is finished. This policy is used to provide a lump sum to surviving spouses, children, business partners, or other insured parties in order to replace the income or pay off debts that the deceased insured would have earned. A “First to Die” insurance policy can be either a whole life or a universal life insurance policy.

If you are married and have dependent children, both you and your spouse should have enough life insurance to cover your household expenses in the event one of you dies. A first-to-die policy, also known as a joint life insurance policy, may be able to give you the coverage you need while saving you money on the premiums. Both individuals are listed as insured parties on the policy. The policy also terminates at that point, leaving the surviving spouse with no life insurance coverage. The policy will pay out its entire death benefit as soon as the first spouse dies, guaranteeing that your children will be adequately protected.

Joint life insurance policies also remove the uncertainty involved in predicting which spouse will die first. You may not be able to afford significant coverage on both of you, so you would have to predict which spouse needs the highest death benefit. This can be a problem if you guess wrong and the spouse with the lower coverage amount dies first. An insurance policy also tends to pay out faster than waiting for the decedent's estate to settle. The surviving spouse can use the policy's death benefit to pay household bills while waiting for the estate proceeds.

You will only have one premium to pay each month instead of two with first-to-die life insurance. Payment processing fees and other charges are also combined into a single policy instead of doubling up for you and your spouse. First-to-die life insurance eliminates wasted premiums if your family only needs one death benefit.

Make sure first-to-die life insurance is right for your family's situation before purchasing a policy. A joint policy may be more expensive than buying two individual policies in certain circumstances. This typically happens when one of the spouses is harder to insure than the other because of differences in age or medical history. You will also only get one death benefit, which may not be enough to continue your family's current lifestyle. If you have disabled children, the surviving spouse may also need a life insurance policy to make sure the children have continued long-term care after both of you are gone. It may be more difficult for an older spouse to obtain a new policy after the first-to-die policy terminates.

This information is not intended to be tax or legal advice, and it may 
not be relied on for the purpose of avoiding any federal tax penalties.
You are encouraged to seek tax or legal advice from an independent
professional advisor.