Joint Life Insurance
At one time, joint or survivorship life insurance policies were primarily used to insure business partnerships. In a modern economy with two income households, many married couples are finding that joint life insurance offer advantages for financial planning while lowering insurance costs. Joint life insurance can provide protection for two people with slightly higher premiums than a single life policy, making it a cheaper alternative.
Joint Life Insurance Policies
There are two basic types of joint life insurance policies. One kind of policy pays the death benefit when the first insured person dies, and the other kind only pays the death benefit upon the death of the second partner or spouse. The death benefit can only be paid once, so if the policy pays the benefit on the death of the first partner, the second partner will have to seek another life insurance policy. Couples or business partners must decide which type of policy will best benefit their surviving partner and financial dependents.
Life Insurance For Family-Owned Businesses
Survivorship life insurance or a joint policy has long been used by business partners to ensure the business’s ability to continue if one partner should die. For couples who own a family business together, joint life insurance is an excellent choice.
If the policy beneficiary is the business itself, the insurance premiums may be tax deductible as a business expense. Joint life insurance on business partners may be considered key man insurance, which is the only type of life insurance premium that is counted as a business deduction and therefore, the premiums are tax-deductible and will lower your tax liability.
Estate Planning With Joint Life Insurance
For affluent couples, joint or second-to-die life insurance, may have advantages for estate planning. While death benefits from a life insurance policy are not subject to taxes, other assets in a jointly held estate may be subject to estate and income taxes, which can be substantial, sometimes up to 50%.
Estate taxes on assets jointly held by a spouse are lower than taxes on assets left to other family members. A second-to-die policy can cover estate taxes allowing heirs to receive the full value of the assets from their relative’s estate.
Other Advantages of Second-to-Die Policies
The cost of 2nd-to-die life insurance is usually significantly lower than for other types of life insurance. In some cases, one spouse may not be able to obtain life insurance due to risk factors like physical health or occupation. It is easier to qualify for a second-to-die policy, since it only pays on the death of the second spouse and insurability is based on the spouse with the least risk. For some married couples, second-to-die life insurance may not offer the best coverage and protection.
Financial Planning
Whole life insurance and universal life insurance policies are often used as a tool in financial planning, since these policies accrue cash value and have a savings or investment feature. A joint life insurance policy has lower premiums than two separate life policies and can provide a married couple with assets to meet financial goals. Since the income tax on life insurance returns is deferred until they are withdrawn from the policy, some couples may also find these policies have tax advantages.
Life Insurance Quotes
While joint life insurance may not be the best choice for every couple, it can provide advantages for estate and financial planning. For couples with family businesses or partnerships, it also may provide tax benefits not offered by other types of policies. It is important for couples to weigh the cheaper costs against the disadvantages of joint life insurance before deciding if this insurance will adequately meet their needs.
To find the best, cheap coverage, rates, and companies, TheLifeInsuranceQuote.com can help you compare life insurance quotes. By getting an affordable quote online from the best life insurance companies, consumers can get an idea of the types of life insurance available and what premiums may be required for their desired level of coverage.
Enter your zip code to begin a free, instant life insurance quote now, and save money when you buy life insurance.
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