Term Insurance Multi-life Policies vs. A Joint First-to-Die Plan
Generally, spouses who want to cover both them and their partner under one policy have the option of choosing a Multi-life Policy or a Joint First-to-Die Policy.
Multi-life Policies cover a husband and wife with what are essentially two individual life insurance policies, which happen to be under one policy number.
- The advantage of this, over two individual policies, is that the family saves the annual policy fee, which ranges anywhere from $30 to $90 per year.
- Multi-life policies still give the insured the same benefits as individual term life policies. For example, if one spouse passes away, the other spouse has the option to continue their coverage at the original pricing given at the original issue date.
- Joint First-to-Die policies also cover both spouses under one policy, but the surviving spouse would lose his or her coverage after the death of the partner who was insured first.
- Many of these policies do include a survivorship benefit, which stipulates that if the surviving spouse dies in the first 30 days, (the actual length of time varies by insurance company) the insurance company will pay out the death benefit. Many of these policies also allow the surviving spouse to convert, without evidence of insurability, to a new individual life policy within the 30-day period.
- It should be noted that the conversion feature on these plans is based on the insured’s attained age, rather than the original issue age
- The insurance company also has to offer the policy at the time of conversion, which means if the surviving spouse is in their 80s, a new policy may not be available.