It makes sense why many couples ask this question. Buying coverage once certainly sounds easier than buying it twice. The short answer is yes, two people can be on the same life insurance policy. But does it generally make sense to do so? Not necessarily. Let’s get into it.
What Is Joint Life Insurance?
This type of coverage is known as Joint Life Insurance, often designed for couples who want to share a single policy. While it may seem like a convenient option, it’s not the best financial choice for everyone. In most cases, buying two separate policies is a more cost-effective strategy.
Joint Life Insurance is a policy that covers two individuals, typically spouses or partners, under one plan. There are two main types of joint life insurance:
- First-to-die: Pays out the death benefit when the first person passes away, leaving the surviving partner without coverage unless they buy a new policy.
- Second-to-die: Also known as survivorship life insurance, it pays out only after both individuals have passed away and is often used for estate planning purposes.
Most joint life insurance policies are whole life insurance, meaning they last for your entire life and accumulate cash value over time. However they also come with significantly higher premiums compared to term life insurance.
Why Buying Two Separate Life Insurance Policies Is Often Better
Although joint life insurance is available, it generally makes more sense for couples to purchase two separate term life insurance policies instead. Here’s why:
1. Limited Options for Joint Life Insurance
The market for joint life insurance is much smaller than for individual life insurance. As a result, you may have fewer choices when it comes to selecting coverage that fits your needs. The limited availability can also make it harder to find a policy with the right terms and premium costs.
2. Higher Costs
Joint life insurance policies are typically whole life insurance, which is almost always more expensive than term life insurance. While whole life policies offer lifelong coverage and a cash value component, term life insurance is much more affordable and designed to cover you for a specific period, such as 20 or 30 years. For most couples, two term life policies provide sufficient coverage at a fraction of the cost.
3. Flexibility and Financial Control
With two separate policies, each person can choose the coverage amount and term length that best suits their individual needs. Most partners don’t make the exact same amount of income or split their bills 50/50. Because of this, you likely want the flexibility to cover the actual financial impact of one partner’s passing. Additionally, if your relationship changes over time, individual policies are easier to manage and adjust than a joint policy.
Is Joint Life Insurance Ever a Good Option?
While two individual policies are often the better choice, joint life insurance can make sense in certain situations. For couples with a high net worth who are more focused on estate planning, second-to-die policies can be useful.
Find the Best Life Insurance for You & Your Partner
Term policies offer more flexibility, cost less, and allow each individual to tailor coverage to their specific needs. For affordable plans starting as low as $4 per month, try our online life insurance calculator. It’s free, totally anonymous, and doesn’t even require an email address. See what offers are available to you today.
