Joint term life insurance is an insurance policy that allows both you and your spouse the opportunity to be in a program that covers both of you under one plan. It can cover any two people, usually husband and wife. Joint term life is the most affordable type of group term life insurance because you are both covered by the same plan, paying only one premium. This type of joint life insurance is also referred to as "survivorship" life insurance or a "second-to-die" policy.
This type of insurance is most commonly used for estate planning, due to the unlimited marital deduction and no estate tax would be due until the surviving spouse's death. The insurance is a way to pay for the estate taxes once the second person dies. The wealthy use this type of insurance most commonly to pay for estate taxes while removing the proceeds of a term life insurance policy through the use of gifting and placing policies in third party ownership, such as a trust or in the name of children.
Rates are usually determined by the age of the older spouse and if both spouses should die in the same accident then full benefits would be available for each life. Be sure to check your life insurance policy fine print to determine if there is a period of time between each death for this double benefit to apply. For example, if the term life insurance plan states that if both spouses die within 15 days of each other resulting from the same accident benefits would be paid for each person. If the second death happens outside of that time frame only one benefit amount would be paid. Also look for a joint life insurance plan that will offer no exclusions, and will pay in the event of death without regard to cause.
Talk over the use of this type of term life insurance with your attorney or financial advisor to ensure that you retain your net worth, instead of letting taxes eat up your savings. This type of joint life insurance can be arranged in such a way, with your other estate planning tools, to retain the full value without having to pay income tax or estate taxes. You will work with your insurance agent to find the most cost-effective policy and leave the estate planning issues to your other professionals.