Significance

• The purpose of a joint life insurance policy is to provide a special death benefit for two people, since it is not known which one may die first. Also, because many couples may be both working, and the finances may depend upon the income of both, this type of insurance provides coverage for both. A joint life policy is usually a whole life policy or a universal life insurance policy, although term insurance coverage may also be purchased.
  
  

Types

• There are actually two different types of joint life insurance policies. Joint Life is also called First to Die. This type is purchased when there is a need for immediate funds from the life insurance to be able to provide for the surviving spouse, and cover such things as funeral and medical costs of the one who passed away.
  
  The other type is referred to as Survivor, Survivorship, or Second to Die Insurance. When this choice is selected, no money is paid until the surviving partner dies. This one is used when the life insurance proceeds are not needed by the surviving partner and are typically paid into a trust fund for the children.
  
  

Function

• Often it can take up to three years for an estate to be settled, especially a large one. During that time, the taxes on the home and estate have to be paid every year, and the family members may also need finances to provide for final medical and funeral expenses, as well as possibly needing money to live on. The insurance could also provide for the entire estate taxes so as not to diminish the amount given to the beneficiaries, or making it necessary to sell the home to divide the estate.
  
  In other cases, a joint life insurance policy may be used to provide for children who will need special care for the rest of their lives. This policy ensures money is available for the continued care of the child.
  
  

Considerations

• Another consideration is when there is a family business. When one spouse dies, the insurance could be set up to provide funds for the surviving spouse for living expenses and other bills. This way, the business would not have to be sold to pay for estate taxes, and there would be money for funeral costs, medical expenses, and some for living expenses. AccuTerm.com mentions that this could be a very good idea for two or more business partners, as well, especially if the income of both are needed to pay the mortgage.
  
  

Warning

• This type of insurance program is usually not flexible once purchased. It also may be hard to obtain since an insurance agent will receive a larger commission on individual policies. Be sure to check around and compare flexibility of plans and costs.
  
  

Benefits

• Another possible use of a joint life insurance policy is that it could also be used to pay off bills. This is an especially good idea if money is still owed on the mortgage, or if there are other large bills. Costs for a joint life insurance policy are less than buying individual policies separately.