Joint Term Life Insurance Plans Explained

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Are you and your partner considering joint life insurance for shared financial protection? Let’s dive into what you need to know about joint life insurance; from understanding how a policy works to comparing its costs with individual coverage. 

Key Takeaways

  • Joint life insurance policies offer cost-efficient options, including first-to-die and second-to-die, useful for estate planning.
  • Benefits include affordability and coverage for partners who may not qualify individually, but they come with limited flexibility and potential challenges in case of divorce or a policyholder's death.
  • Downsides may include restrictions on changes to coverage and the possibility of coverage ending if the relationship ends.

Understanding Joint Term Life Insurance

Joint term life insurance covers two individuals, usually spouses or partners, under one policy. It’s often a more cost-effective option than two separate policies, making it an attractive choice for couples looking to save money while ensuring financial protection.

There are two main types of joint life insurance policies:

1. First-to-Die Policies: This policy pays out the death benefit when the first insured person passes away. The surviving partner receives the financial support needed to cover immediate expenses. However, once the benefit is paid, the policy ends, leaving the survivor without life insurance. It's wise to consider additional coverage for ongoing protection.

2. Last-to-Die Policies: Also known as survivorship life insurance or second-to-die life insurance; this policy pays out after both insured individuals have passed away. It’s ideal for estate planning and ensuring wealth transfer. This type of policy can help cover estate taxes or other liabilities, providing peace of mind that your beneficiaries won’t need to sell assets to cover costs.

Joint term life insurance can be a good option for Canadian couples who share financial responsibilities and want an affordable way to protect their family's future.

Tips For Assessing Your Joint Life Insurance Needs

Financial Support Requirements

When evaluating joint term life insurance, start with your financial support needs. Look at your debts, like mortgage payments and loans, as well as daily living expenses such as utility bills and groceries. Don’t forget to include child care and education costs. This helps ensure your policy will provide enough support if one partner passes away.

Income Replacement

Another crucial factor is income replacement. Consider how losing one partner’s income or retirement savings will affect your financial situation. You’ll want to ensure the surviving spouse can maintain their standard of living and meet future financial obligations. Here’s how to calculate it:

  • Determine how many years the income will need to be replaced.
  • Account for inflation to maintain the living standard.
  • Multiply the insured partner’s annual income by the number of years it needs to be replaced, adjusting for inflation and other financial factors.

Who Might Not Need Joint Term Life Policies

Joint term life policies aren’t for everyone. They might not be suitable if:

  • Each partner has significantly different insurance needs.
  • One partner has a serious health condition, making joint policies less cost-effective.
  • Your financial goals require separate policies for more tailored coverage.
  • You prefer the flexibility of adjusting individual policies as your needs change.

Assess your unique situation to determine if a joint term life insurance policy is the right fit for you and your partner.

Pros & Cons of Joint Term Life Insurance

Joint Term Life Insurance Pros

  • Easier Qualification: Joint term life insurance is ideal for partners who might struggle to qualify for individual policies due to health conditions.
  • Cost-Effective: These policies are generally more affordable than buying two separate policies, making them a great option for couples on a budget.
  • Simplified Process: The application process is often simpler, saving time and reducing hassle for couples.

Joint Term Life Insurance Cons

  • Less Flexibility: Joint term life insurance policies can be less flexible than individual ones. If you want to split the policy later, it might not be possible with some insurers.
  • Complications in Divorce: Managing joint policies during a divorce can be tricky without specific riders to address this scenario.
  • Higher Costs After Payout: After a first-to-die payout, the surviving partner might face higher costs for new coverage due to their increased age.

When considering joint term life insurance, weigh these pros and cons to decide if it’s the right fit for your needs.

Quick Tips for Keeping Your Joint Life Insurance Updated

Your joint life insurance policy should be flexible enough to adapt to any changes in life. Even if you have temporary coverage like a term life insurance policy, 10, 20 and 30 years can be a big time commitment. It is always a best practice to look over your plan once in a while to see if it needs any tweaks or updates to better support your needs.

Divorce & Separation

In cases of divorce or separation, joint term life insurance can be tricky, especially if you already have a plan set. Consider:

  • Converting your joint policy into two separate ones, this might change your policy premiums depending on your provider. Make sure to review all your options to ensure you’re getting the best deal possible. 
  • After a divorce, the surviving member in a first-to-die policy could face higher insurance costs due to age or health changes.
  • Update the beneficiary as per the divorce agreement, possibly to a child or another family member.

Updating Coverage

Regularly reviewing your joint term life insurance is crucial to keep it aligned with your financial needs. A good rule is to review your coverage once a year to ensure it remains sufficient and accurate for your situation. Keeping your policy updated helps protect your loved ones and keeps your financial plans on track.


  • Cost-Effective Solution: Ideal for couples seeking financial security.
  • First-to-Die: Pays out when the first insured person passes away.
  • Second-to-Die: Pays out after both insured individuals pass away.
  • Advantages: Affordable coverage for both partners under one policy.
  • Disadvantages: Less flexibility, potential complications during divorce.
  • Regular Reviews: Assess needs and consult with a financial or life insurance advisor to keep your plan up-to-date with financial goals.

Frequently Asked Questions

What happens to a joint life insurance policy in the event of divorce or separation?

In the event of a divorce or separation, a joint term life insurance policy can become tricky. You might need to convert your joint policy into two separate individual policies. This is often necessary because joint policies are designed to cover both partners together, and a split can complicate who gets what. It’s also essential to update your beneficiaries according to the terms of your divorce agreement, ensuring that your loved ones are still protected.

Additionally, if you have a first-to-die policy, the surviving partner may face higher insurance costs due to age or health changes after the divorce. Regularly reviewing your policy with a financial advisor can help navigate these changes and ensure you maintain adequate coverage. It's a good idea to discuss these potential issues before they arise, so you're prepared for any adjustments needed to keep your financial plans on track.

Who can benefit from joint term life insurance coverage in Canada?

Joint term life insurance is a great option for Canadian couples looking to save on premiums while securing their financial future together. It’s especially beneficial for spouses or partners with shared financial responsibilities, like mortgages or child-rearing costs. With a joint policy, you get the peace of mind that comes with knowing your partner is covered without the expense of two separate policies.

However, joint term life insurance isn’t for everyone. If you and your partner have significantly different insurance needs or if one of you has a serious health condition, separate policies might be a better fit. Additionally, if you prefer the flexibility to adjust coverage individually as your needs change, single policies could be more suitable. Regularly reviewing your joint policy with a financial advisor ensures it continues to meet both your needs effectively.

How does joint life insurance differ from individual life insurance policies?

Joint term life insurance covers two people under one policy, typically spouses or partners, making it a cost-effective option compared to buying two separate individual policies. The main types are first-to-die, which pays out when the first person passes away, and second-to-die, which pays out after both have passed. This setup can save money and simplify management, but it’s less flexible if your needs change or if you face a divorce.

In contrast, individual life insurance policies cover just one person. They offer more flexibility since each policy can be tailored to the individual’s specific needs and adjusted independently over time. If one partner’s circumstances change—like health or financial situation—their policy can be updated without affecting the other’s. For Canadians looking to balance cost and coverage, joint term life insurance is great for simplicity and savings, but individual policies win on flexibility.

Can couples of any age apply for joint life insurance in Canada?

Yes, couples of any age over 18 can apply for joint term life insurance in Canada, but there are some important factors to consider. Typically, insurers have minimum and maximum age limits for applicants, usually ranging from 18 to 75 years old. Younger couples might find it easier to get approved with lower premiums due to better overall health, while older couples may face higher premiums and stricter health evaluations.

Regardless of age, joint term life insurance can be a great option for couples looking to secure financial protection. It offers a cost-effective way to cover both partners under one policy. Just remember to review your policy regularly and update it as your life circumstances change, such as having children or paying off a mortgage. Speaking with a life insurance advisor can help you find the best coverage for your needs.

What factors should couples consider when deciding on joint life insurance coverage?

When deciding on joint term life insurance coverage, couples should first consider their financial goals and responsibilities. Look at your combined debts, like mortgages and loans, as well as daily living expenses. Think about future costs, such as your children’s education and ongoing income replacement if one of you passes away. It’s important to ensure that the surviving partner can maintain their standard of living without financial strain.

Another key factor is the policy type—first-to-die or second-to-die. First-to-die policies provide immediate financial support to the surviving partner, but leave them without coverage afterward. Second-to-die policies are great for estate planning as they pay out only after both partners pass away, helping cover taxes and other expenses. Regularly review your coverage to make sure it still fits your changing needs, especially after major life events like having kids or buying a home. Always consult with a financial advisor to tailor the policy to your specific situation.

Can non-married couples or business partners qualify for joint life insurance?

Yes, non-married couples and business partners can qualify for joint term life insurance. This type of policy is not just for married couples. It’s designed to cover two people, making it a great option for partners who share financial responsibilities. Whether you’re living together, sharing a mortgage, or running a business, joint term life insurance can provide financial security for both parties.

For business partners, a joint term policy can ensure that the surviving partner has the funds needed to keep the business running smoothly if one partner passes away. For non-married couples, it offers peace of mind by covering shared debts and living expenses. Just make sure to regularly review your policy with an advisor to keep it updated with your changing needs.

What happens to the policy if one partner passes away?

If one partner passes away with a first-to-die joint term life insurance policy, the policy pays out the death benefit to the surviving partner. This payout can help cover immediate expenses, debts, and provide financial support during a difficult time. However, once the benefit is paid, the policy ends, and the surviving partner will no longer have life insurance coverage under that policy. It’s a good idea to review your insurance needs and consider getting a new policy to ensure ongoing protection.

For a second-to-die joint term life insurance policy, the payout only occurs after both partners have passed away. This type of policy is often used for estate planning, helping to cover taxes or other expenses after both partners are gone. If one partner dies, the policy remains active, and no benefit is paid until the second partner passes away. Regularly reviewing your coverage with an advisor can help ensure it meets your needs as life changes.