Joint and survivor term and whole life insurance policies are excellent estate-planning tools. These insurance policies typically cover the lives of two people–most often a married couple or business partners.
A well-structured joint or survivor life insurance policy can protect your net worth for your heirs, or guarantee payment of debt for business partners. Additionally, these insurance policies are usually less expensive than having two or more individual life insurance policies.
Joint Life Insurance Basics
In a joint, or first-to-die term or whole life insurance policy, coverage usually includes spouses or two or more business partners. This type of insurance policy pays the benefit when the first person dies, providing the surviving policyholder with funds to pay the mortgage, care for children, or to pay any outstanding business loans. Comparing insurance quotes for joint life insurance policies is as easy as following the link and entering your zip code.
Survivorship Life Insurance Basics
In a survivorship life insurance policy, benefits are not paid until the the survivor, or second-to-die, be it a spouse or business associate, passes away.
This type of life insurance policy often works best for couples with sizable assets. Survivorship insurance can ensure that the largest part of an estate is left to heirs by helping to pay for estate taxes, or to pay off business debt.
Advantages and Disadvantages of Joint and Survivorship Life Insurance Policies
Joint and survivor policies have several advantages:
- A joint or survivor term or whole life insurance policy typically has a lower premium than two separate policies
- Underwriting requirements are usually less stringent, especially if one party has a record of good health. This may make it easier to insure a spouse or business associate who might have poor health
- Joint life or survivor life insurance can be written as a term policy or as a whole life policy, the latter builds cash value like any other whole life policy
Although joint and survivor policies have several beneficial qualities, these life insurance policies also have a few drawbacks:
- Once written, joint and survivor life insurance policies are not very flexible. Premiums and the face value of the policy typically can’t be changed
- Oftentimes, the younger person in the policy pays more than he or she would for an individual life insurance policy because premiums are calculated on the average age of both insured parties
Which Policy Is Best for You?
Financial planners often recommend a joint life insurance policy in business settings. These policies can be cheaper than two separate policies. Also, should the principal in the business pass away, the partner or associate is assured funds to continue operating the business.
For estate planning purposes, if the funds from the estate aren’t needed immediately by the heirs, a survivorship policy may be a sound choice.
To compare insurance quotes from a wide range of insurance companies and find the policy that works best for your needs, simply follow the highlighted link and enter your zip code.