Joint Life (First-to-Die) Policy
One policy covering two or more lives with the death benefit payable at the first death, often used for business partners or couples with estate needs.
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Under a joint life (first-to-die) insurance policy covering two people, when is the death benefit paid and what happens to the coverage afterward?
The benefit is paid on the first death, and coverage on the survivor generally terminates — A joint life policy insures two lives and pays the full face amount on the death of the first insured. The contract then typically terminates, because the risk the policy was designed to cover, the first death, has occurred. This first-to-die design is often used in business settings, for example to fund a buy-sell agreement where two owners need cash when the first partner dies.
National insurance concept
Two spouses purchase a life insurance policy that pays the death benefit when the first spouse dies. This policy is called:
Joint life insurance — Joint life insurance covers two lives under one policy and pays the death benefit on the first to die. It is commonly used by spouses or business partners who want funds available when the first insured dies, and it is generally less expensive than two separate policies. Joint life policies are often purchased to protect income or fund a plan that depends on the first death. Because only one death benefit is paid, the coverage ends when the first insured dies.
National insurance concept
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