What should I consider when choosing between a term joint life insurance policy and a permanent-plan JL?


The differences between term joint life insurance and permanent-plan joint life follow the distinction between permanent and term life coverage in general. Therefore, the JL plan you choose will impact on the amount and frequency of the premium payments, and the overall performance of the policy.

Characteristics of Permanent Joint Life Policies

  • Larger premium outlays than term JL policies, but not higher than a certain guaranteed maximum premium amount.
  • Cash value which accumulates on a tax-deferred basis.
  • Increasing death benefits are offered by some permanent plans, usually universal life.
  • The permanent plans may use traditional whole life, current assumption life or universal life.

Characteristics of Term Joint Life Insurance

  • Initial premium rates are the lowest on the market but they rapidly increase as the insured ages. This is especially the case with annual renewable term life policies.
  • Little, or no, cash value accumulations are provided.
  • Level-premium joint life insurance is the best option when one needs coverage for a short period of time.

Additional Insured Riders

These are several term rider options that joint life insurance offers:

  • Guaranteed purchase riders permit surviving insureds to buy insurance either on themselves or on other insureds without evidence of insurability.
  • Graded premium plans allow the policyholder to pay lower initial premiums which increase over time, similarly to term premiums.
  • Substitute insured options allow for the substitution of insureds with evidence of insurability.
  • The joint premium waiver option is a joint disability premium waiver designed for the family market.
  • The common disaster clause is a provision included in some policies, stating that the face amount on each death will be paid if both insureds die in a common disaster. Secondary beneficiaries usually need to be named in such cases.
  • Some insurers offer the split option which permits the splitting of the policy into two separate policies on each insured, each of them with a face amount equal to the JL face amount. Evidence of insurability usually required.
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