Which Policy Is Best For Me: Joint Life Vs. Survivorship Insurance?
Both joint life insurance and survivorship life insurance, sometimes called variable survivorship life insurance, are types of policies that are used to insure two people, typically spouses or couples. As opposed to a life insurance policy that covers a single person paying out to a beneficiary when they pass, these two types of policies are intended for couples to make more specific plans, accounting for both of their lives before paying out the policy terms to a beneficiary. Because both joint life insurance and survivorship life insurance are less common, many people don’t know what they are, overlooking them as an option altogether. Keep reading to learn more and determine whether one of these types of insurance policies is right for you and your partner.
Joint Life Insurance
Joint life insurance policies are types of coverage that are sometimes called “first to die” coverage. When the first partner passes, the benefits payout to the surviving spouse. Joint life insurance operates quite similarly to a typical life insurance policy that one may have after placing their spouse as the beneficiary. The difference is you only need one policy for the two spouses, as opposed to purchasing two separate life insurance policies, one for each spouse.
Survivorship Life Insurance
A survivorship life insurance policy comes into play once the second partner passes. When a survivorship life insurance policy covers two partners, benefits aren’t paid out until both members have passed, in which coverage then goes to a designated beneficiary. Again, this only requires the purchase of one policy to have both spouses covered, but neither spouse will receive benefits when the first policyholder passes.
Choosing Between the Two
Joint life insurance and survivorship life insurance are similar in covering two spouses under one policy, but as you can see, they have some unique differences that make them appropriate for different scenarios. So, how do you decide what makes sense in joint life vs. survivorship coverage? It depends on what your situation and goals are.
The choice you make will depend on who you’re trying to cover. If both spouses work and the goal is to ensure the surviving spouse can continue with that quality of life when one passes, joint life insurance is preferable because it will pay out to the surviving spouse. This situation could be optimal for families who have large debts, such as a mortgage, young children, or any other situation where the ability of the surviving spouse to continue paying the bills is of chief concern.
Typical situations where survivorship policies become important are for families planning for estate taxes and inheritance taxes. Further, because the policy will be paid out to a beneficiary, often a child or other relative of the couple, these policies could be ideal to ensure a child left without parents will still be able to get a jump start on life through college tuition, purchasing a home, etc.
Schechner Lifson Corporation can offer assistance when it comes to your life insurance options. Contact us today to see how we can make sense of the world of insurance, providing you with the best and most affordable coverage possible.