Should Married Couples Get Joint Life Insurance or Separate Insurance Policies?

Advice for married couples exploring joint life insurance versus separate policies, with expert insights, real examples and cost comparisons.

Overview: What Married Couples Should Know About Life Insurance:

These sections explain everything you need to know about life insurance for married couples, deciding between a joint life policy and how it compares to separate life insurance policies. Some key concepts include, Canadian Statistic, insurance premium tables, pros and cons, tips, expert advice and real life case studies to help you choose with confidence.

1. Introduction: Why Life Insurance Matters After Marriage
2. Who Should Consider Joint Life Insurance: Married, Common-Law and Same-Sex Couples
3. Key Statistics on Married Couples in Canada
4. What Is Joint Life Insurance?
5. What Are Separate Life Insurance Policies?
6. Joint vs. Separate Life Insurance: Feature Comparison & Pros and Cons
7. Table: Joint Life Insurance Premiums for Married Couples in Canada
8. Table: Individual Life Insurance Premiums for Married Spouses
9. What If My Partner Is a Smoker? How Smoking Affects Joint and Individual Policies
10. Cost Comparison by Age, Term and Smoking Status
11. When Joint Life Insurance Makes Sense and When It Doesn’t
12. Common Mistakes Married Couples Make With Life Insurance
13. Expert Advice From Canadian Life Insurance Professionals
14. Top 5 FAQs About Joint Life Insurance for Married Couples
15. Real-Life Case Study: Comparing Two Canadian Couples
16. Downloadable PDF: Joint vs. Separate Life Insurance Policies Worksheet
17. What Most Married Couples Overlook About Joint Life Insurance Policies
18. Conclusion: How to Make the Right Decision With Confidence

1. Introduction: Why Life Insurance Matters After Marriage

So you just got married! Congratulations!  Maybe you’ve decided to live together as a common-law couple! Or perhaps you’ve entered into a civil union! Whatever your situation, congratulations on your new chapter.

In general the decision to live with and share your life with someone is one of those major life events that reminds you to consider purchasing life insurance. At the same time, this type of relationship often marks the beginning of a time where couples feel responsibilities to people other than themselves. 

Marriage Changes Your Financial Priorities

One of the areas where you see a big shift is in your financial world. The financial decisions you make now affect more than just you.

Choosing a partner that you want to say ‘I do’ with is the kind of event when we often see people realizing that they now have a responsibility to protect someone else financially that they may not have had before.

One decision that you need to make with your partner is whether or not to get life insurance as a married couple to protect each other in the event that one of you passes away unexpectedly. 

Spoiler alert! I am going to take the time here to show you why you should want to do this and to help guide you with the decision as to which life insurance plan, a jointly owned policy or individual policies, are best for you.

2. Who This Life Insurance Guide Is For: Married, Common-Law and All Canadian Couples

This article is written for all types of Canadian couples looking for life insurance together whether you’re legally married, common-law partners or part of an LGBTQ+ union.

An important thing to remember is that the only thing that matters with what we are discussing is that you have chosen a partner and that this person is someone who you will be sharing your life with. We are talking about everyone, whether you’re legally married, common-law partners or part of an LGBTQ+ union, the information that we are providing is based on the fact that you are in a long-term relationship with a partner that would suffer financially if you were to pass away unexpectedly and you are interested in finding out options to prevent that from happening. Buying a life insurance policy allows for you to provide that financial protection and as the owner of the policy you tell the insurer who the beneficiary is.  A life insurance policy is available to you in both joint ownership and individual ownership formats regardless of your legal marital status or gender. 

• Legally Married
• Common-Law Partner
• Same-Sex (LGBTQ+ Union)
  

3. Key Statistics on Married Couples in Canada

Have you ever wondered how Canadians compare with the rest of the world in relation to how we formalize our relationships?  Here are some statistics with regards to how many Canadians are in long term relationships and what type of relationship those are.

Married vs. Common-Law Couples in Canada:

When we talk about people being married this applies to any couple that have entered into a union that the government recognizes through a marriage license, ceremony and marriage certificates. Common law couples are defined by living together in a conjugal relationship without having gone through the process of getting married. The statistics show that in Canada:

• 57% of Canadian adults are living with a spouse or common-law partner.
• Marriage remains the predominant type of union in Canada.
• 77% of all couples were legally married, while 23% living common-law.
• Canada has the highest share of couples living common law among the G7
  

Based on the 2021 Census of Population by Statistics Canada
Source: StatCan Daily, July 13, 2022 – View Full Report

Gender Diversity and Same-Sex Couples in Canada

When we look at significant dates in recent Canadian history, July 20, 2005 is one of them.  This is the date that the Civil Marriage Act came into effect and made same-sex marriages legal across Canada.  Granted, some of the provinces had legalized these marriages prior to that date, but that was when as a nation Canada became the fourth country in the world to legalize these marriages. Given that we are about 20 years into all marriages being legal within Canada here are some stats on the diversity of marriages within Canada.

Total couples in Canada (2021): 8,576,580

• Different-gender (cisgender) couples: 8,448,945 (98.5%)
• Same-gender (cisgender), transgender, or non-binary couples: 127,640 (1.5%)

Same-Gender (Cisgender) Couples: Total: 95,435 couples (1.1%)

• 46,780 female same-gender couples
• 48,655 male same-gender couples

Transgender and Non-Binary Couples: Total: 32,205 couples (0.4%)

• Transgender couples: 21,760
• Non-binary couples: 10,445

Source: Statistics Canada, Census of Population 2021 – Table: Gender diversity status of couple

Table: Marriage vs. Common-Law Couples in Canada by Province

Province & Territories	Married Couples	Common Law Partners	% Married Couples	% Common-Law Partners
Alberta	1,703,285	330,655	~83.7%	~16.3%
British Columbia	2,036,165	427,970	~82.6%	~17.4%
Manitoba	515,480	100,785	~83.6%	~16.4%
New Brunswick	298,905	86,900	~77.5%	~22.5%
Newfoundland and Labrador	217,395	48,815	~81%	~19%
Northwest Territories	11,415	6,020	~65.5%	~34.5%
Nova Scotia	372,690	98,885	~79.0%	~21.0%
Nunavut	6,210	6,275	~49.7%	~50.3%
Ontario	5,738,390	1,031,340	~84.7%	~15.2%
Prince Edward Island	62,350	13,060	~82.7%	~17.3%
Quebec	2,310,860	1,657,050	~58.2%	~41.8%
Saskatchewan	440,040	86,795	~83.5%	~16.5%
Yukon	12,450	5,830	~68.1%	~31.9%
Canada	13,725,625	3,900,375	~77.9%	~22.1%

Note: The percentages for married and common-law couples are derived from the proportion of couples in each province or territory. Specific data on same-sex couples by province or territory were not detailed in the available sources.

4. What Is Joint Life Insurance?

Earlier I mentioned the option to have a joint life insurance policy. If you’re not familiar with what that means I will take a second to explain it here. A jointly owned insurance policy is a policy where there are two owners and one policy. Specifically, it covers two lives and typically will pay the death benefit in one of two situations.

• First-to-Die: This joint policy covers two lives and pays the death benefit out to the surviving owner after the death of either policy owner.
• Last-to-Die: This type of policy requires both policy owners to die before the death benefit pays out to the beneficiary named in the plan.

These types of policies have different roles in the financial planning process and both are very valuable tools to provide financial protection at specific points for the policy owners and their loved ones. 

• In a Joint First-to-Die insurance policy, this is a single policy that covers two lives and pays a single death benefit upon the death of the first insured person.
• By contrast a Joint Last-to-Die insurance policy requires both of the insured people to die before a single death benefit pays out to the beneficiary named in the plan.
  

“Joint life insurance is a type of policy that provides coverage for 2 people instead of just 1 and offers a single death benefit that is paid out when either of the insured people pass away.”

Source: Canada Life, Joint Life Insurance: First-to-Die and Last-to-Die

Joint First-to-Die vs. Joint Last-to-Die: What’s the Difference in Joint Life Insurance?

The difference between joint first-to-die and joint last-to-die coverage is explained quite well in the names of the policies. A joint policy will have two lives insured covered and only pays a single death benefit. Joint first-to-die coverage pays that death benefit out when the first life insured passes away, so one of the covered individuals remains alive. Typically this person receives the death benefit payment. Often a couple will use a joint first-to-die insurance policy as a way to insure their mortgage or other items that they would like to provide the surviving partner with financial support for. A joint last-to-die policy requires both of the lives that are insured to pass away prior to paying a single death benefit out to the beneficiary named in the policy. Joint last-to-die policies are often used by couples as part of their estate plan as a way to offset taxes and efficiently pass wealth onto the next generation.

Joint Life Insurance: First-to-Die vs. Last-to-Die Comparison

When we compare the two styles of joint life insurance policies side by side you can see that they fit different niches for what a family needs. You will also see that relative to one another joint first-to-die has a higher premium than joint last-to-die. This is because for a first-to-die policy only one death needs to happen to trigger the payment of the death benefit while for a last-to-die policy two people need to pass away so statistically that should take longer to happen and as a result the premium is lower.

Feature	Joint First-to-Die	Joint Last-to-Die
When Payout Occurs	First Death	Second Death
Common Use Case	Mortgage Protection	Estate Planning
Policy Ends After	Fist Death	Second Death
Cost	Higher than last-to-die	Lower than first-to-die
Who It’s Best For	Young Families	Succession Planning
Estate Planning Friendly?	Not its intended purpose	Excellent tool for estate planning
Tax Efficiency	Yes	Yes

5. What Are Separate Life Insurance Policies?

The other option that you may consider for life insurance after you have gotten married is to own separate policies. This means that each individual in the relationship is covered by their own policy with a death benefit payable to a named beneficiary when they pass away. Looking at the key features of individually owned policies we see that:

Key Feature	Description
Ownership	Anyone with insurable interest
Payout	After the death of the life insured
Underwriting	Based on the individual
Customization	Fully
Flexibility	Excellent

Why Choose Separate Policies?

So why would you choose separate life insurance policies? There are many circumstances where they fit better than joint policies. Here are a few examples of when separate policies may be a better fit than joint policies.

Reasons to Choose Separate Insurance Policies For Married Couples

• One partner has health issues: As a result, this situation makes joint first-to-die more expensive because the odds that one out of two people pass away (the event that triggers this type of policy to pay out) are higher when one person has health problems.  Generally, when one partner has health issues the premiums will be based on that individual, so any savings that may have been available with joint policies often disappear in this circumstance.

• One partner is a smoker: Similar to when one person has health issues, a smoker faces a shorter life expectancy than a non-smoker.

• Income levels differ: Joint policies offer a single death benefit so in a situation where there is income disparity it often is better to choose separate policies because each policy can have its own unique death benefit amount.

• Insurance needs differ: Another situation where joint policies offering the same death benefit amount doesn’t work is when there are different needs revealed by the needs analysis.  If one person requires a far larger amount of support than the other separate polices allow for that to happen

• Tax strategies differ: Depending on how your financial plan was applied when you are saving money there may be differences in your current tax situation where separate policies address different needs in a more cost effective way than a joint policy would.  

• Estate plans differ: In certain situations one partner faces a significantly different estate planning situation than the other does. If there is a significant difference in the tax burden that will apply to one estate it may make sense to purchase separate life insurance policies to save premium dollars by not overfunding one partner’s needs significantly.  

Realistic Example #1: Same Coverage Amount, Different Risk

When you apply for a joint life insurance policy the insurer will underwrite both applicants and then they come up with something that they call an ‘Equivalent Single Age’ (ESA). This ESA is what is used to calculate the premium so obviously, the lower that number is, the better the premium that you will be offered. Let’s consider a newly wed couple. Daniel and Sarah who are both 40 years old. They have completed their needs analysis and the result is that the surviving spouse needs $500,000 to offset debts, expenses and income support. Since their needs are the same, a joint first-to-die policy is a realistic option for them. But to add to the mix, although Sarah is in excellent health, Daniel is a smoker who also has high blood pressure. When we look at the ESA rules, if the policy is joint first-to-die you will see a number that is higher than 40 because a single event between two people triggers the benefit payout. When you add in one of the applicants being a smoker with a chronic health condition the premium can go up very quickly. In this case it would definitely

If Instead, they buy two individual term life policies:
• 🚺 Sarah: $500,000 coverage for 20 years — $32.63/month ( RBC Life Insurance)
• 🚹 Daniel: $500,000 coverage for 20 years — $126.00/month ( BMO Insurance)

If Daniel passes away, Sarah still keeps her policy. She can even update her beneficiary later.

Realistic Example #2: Different Coverage Amounts

We spend a lot of time recommending to applicants that they complete a needs analysis when they start the process of buying life insurance. This process reveals what your beneficiary would need if you passed away so that you know how much coverage to buy.  When you are a newly married couple there is a chance that you won’t have the same needs. For example, this can be based on any number of factors, the most significant is often what each partner does for employment. If we look at the example of Monica, who works as a stay-at-home parent and Lucas, who works outside the home we see a different amount of needs in the calculator. Assuming that they are both 30 years old and in excellent health they should consider separate policies because it allows them to tailor each death benefit to the needs each individual has. A joint policy with a single death benefit would create a situation where Monica has more coverage than she needs and the premium would be higher than they need to pay to offset the need that they have.  

• 🚹 Lucas: $750,000 term 30 life policy — $64.35/month ( RBC Life Insurance)
• 🚺 Monica: $250,000 term 30 life policy — $19.85/month ( RBC Life Insurance)

6. Joint vs. Separate Life Insurance: Feature Comparison & Pros and Cons

Deciding on joint versus separate life insurance policies, it’s important to compare key features for both polices.

Feature Comparison: Joint vs. Separate Life Insurance

Feature	Joint Life Insurance (One Shared Policy)	Separate Life Insurance (Two Individual Policies)
Number of Policies	One life insurance policy	Two life insurance policies
Premium Cost	Lower cost than buying two separate polcies	Higher cost
Flexibility	Same Death Benefit for Both lives covered	Different death benefit amounts for each policy are available
Payout Timing	Pays out on either first or second death	Pays out when insured person dies
Underwriting	Two people for one policy	One person per policy
Ideal Use Case	Married couples with similar needs.	Married couples needing different coverage amounts.
What Happens After Separation	Policy may have a guaranteed provision to allow for it to be split but not at full death benefit amount	Owner controls beneficiary designation and it can be changed
Rider Options	Few options available	More options for individual riders
Estate Planning Suitability	Less flexible	More flexible
Control Over Policy	Two owners must agree	One owner controls decisions

Joint vs. Separate Life Insurance: Pros and Cons

When we look at the pros and cons for each type of life insurance it is important to remember that the joint life option has two ways it can be set up. Joint first-to-die (JFTD) and joint last-to-die (JLTD). Each one has different applications where it shines or where it may not be the best choice. Here is a list to help you decide what is best for your situation.

Joint Life First-to-die Insurance

✅ Pros	❌ Cons
Great for debt and expense support when one partner dies as the surviving spouse receives the death benefit.	Policy ends after first death so surviving spouse may be left without life insurance
Policy fees and expenses to cover two lives covered in one policy	Doesn’t work well if one partner has poor health or needs are different

Joint Life Last-to-die Insurance

✅ Pros	❌ Cons
Great estate planning tool	No help to surviving spouse as no death benefit paid on first death
Can cover two people even if one has very poor health because death benefit payout requires both lives insured to pass away	Difficult to deal with in the event of marital breakdown

Separate Life Insurance Policies

✅ Pros	❌ Cons
Great for debt and expense support when one partner dies as the surviving spouse receives the death benefit.	Overall cost can be more expensive and requires managing two separate polices instead of one.

7. Table: Joint Life Insurance Premiums for Married Couples in Canada

Breakdown of First-to-Die and Last-to-Die policy options

Joint First-to-Die

Age of Couple	Coverage Amount	Policy Type	Monthly Premium Term 10	Monthly Premium Term 20
30	$250,000	Joint First-to-Die	$22.28	$30.60
35	$250,000	Joint First-to-Die	$23.40	$36.45
40	$250,000	Joint First-to-Die	$29.03	$47.48
45	$250,000	Joint First-to-Die	$41.40	$74.48
50	$250,000	Joint First-to-Die	$54.45	$120.38
55	$250,000	Joint First-to-Die	$108.00	$212.18
60	$250,000	Joint First-to-Die	$185.18	$374.18

Joint Last-to-Die

Age of Couple	Coverage Amount	Policy Type	Monthly Premium Term 10	Monthly Premium Term 20
30	$250,000	Joint Last-to-Die	$15.98*	$18.90*
35	$250,000	Joint Last-to-Die	$15.98*	$18.90*
40	$250,000	Joint Last-to-Die	$16.20	$19.35
45	$250,000	Joint Last-to-Die	$16.88	$22.73
50	$250,000	Joint Last-to-Die	$19.80	$31.50
55	$250,000	Joint Last-to-Die	$29.70	$50.63
60	$250,000	Joint Last-to-Die	$44.55	$82.80

8. Individual Life Insurance Premiums for Married Spouses

Comparison of separate policies for each partner by age and coverage

Age	Coverage Amount	Monthly Premium 🚹 Male Term 10	Monthly Premium 🚹 Male Term 20	Monthly Premium 🚺 Female Term 10	Monthly Premium 🚺 Female Term 20
30	$250,000	$16.20	$19.35	$11.70	$17.10
35	$250,000	$16.43	$21.83	$12.60	$20.93
40	$250,000	$18.68	$25.58	$16.20	$25.65
45	$250,000	$26.55	$46.35	$21.38	$36.23
50	$250,000	$40.28	$73.80	$32.40	$57.15
55	$250,000	$67.95	$133.88	$49.95	$93.83
60	$250,000	$116.33	$235.80	$82.80	$162.23

9. What If My Partner Is a Smoker? How Smoking Affects Joint and Individual Policies

If we recall a few sections back, I mentioned something called the Equivalent Single Age (ESA) that the insurers come up with when they are issuing a joint policy. If you think about it this way, if a pair of 40 year old spouses are both healthy and apply for a joint first-to-die policy the ESA is higher than 40 because the policy pays out after only one of two people die. This means the risk is higher to the insurer. If it is a joint last-to-die policy that ESA would be lower than 40 because two people need to die before the benefit pays out so the risk to the insurer is lower. But what happens when one of the partners covered by a plan smokes?

Smokers by default pay higher premiums than non-smokers. There is empirical evidence that shows that smoking shortens your life and causes significant health problems. Life insurance rates for smokers reflect this risk with higher premium amounts charged to smokers than non-smokers. If your partner is a smoker it will result in a higher ESA being applied to the policy and as a result, a higher premium. Smokers also aren’t often able to access preferred underwriting either. If you are in exceptionally good health some term insurance policies may be offered to you at a lower premium than was originally calculated. These are often called ‘preferred’ or ‘super preferred’ rates.  If you would qualify for these rates and have a spouse who is a smoker you may want to consider separate policies because a joint policy with a smoker negates any preferred rates you may have been offered. Take the time to explore which option, joint or separate policies work best for you and your partner.

10 Cost Comparison by Age, Term and Smoking Status

Average Cost Difference Between Joint and Separate Coverage by Age Group

Age	Coverage Amount	Term (Years)	Smoking Status	Joint (First-to-die) Monthly Cost	Individual Policies Monthly Cost (Male – Female)	Cost Difference Per Month (Individual – Joint)
30	$250,000	20	Non-Smoker Couple	$30.60	$19.35 + $17.10	$5.85
30	$250,000	20	One Smoker, One Non	$46.13	$35.78 + $17.10	$6.75
30	$250,000	20	Smoker Couple	$54.68	$35.78 + $26.10	$7.20
40	$250,000	20	Non-Smoker Couple	$47.48	$28.58 + $25.65	$6.75
40	$250,000	20	One Smoker, One Non	$92.70	$76.28 + $25.65	$9.23
40	$250,000	20	Smoker Couple	$121.05	$76.28 + $55.35	$10.58
50	$250,000	20	Non-Smoker Couple	$120.38	$73.80 + $57.15	$10.57
50	$250,000	20	One Smoker, One Non	$240.53	$200.25 + $57.15	$16.87
50	$250,000	20	Smoker Couple	$301.50	$200.25 + $121.28	$20.03

11. When Joint Life Insurance Makes Sense and When It Doesn’t

Everyone’s individual circumstances are different and the choice between a joint life insurance policy or individually owned insurance policies won’t be the same for everyone. Every couple that has just gotten married has a different financial situation, different needs and different goals. The decision about what type of coverage to buy depends on these unique characteristics.  

When Joint Life Insurance Makes Sense For Married Couples

• Shared debts like mortgage: This is a great option for joint coverage because the need for both partners is the same and the goal of paying off the mortgage if one person dies fits ideally into the way that a joint first-to-die life insurance policy works.
  
• Similar health profiles: With similar health profiles a joint policy works well because the premium calculation is not thrown off by one person causing the premium amounts to increase on the joint policy
  
• No children or separate dependents: Since there is a single death benefit payment joint policies are great tools for a newly married couple where the concern is supporting the spouse if something unexpected happens, there aren’t children to worry about so when the benefit of a first-to-die policy pays out the death benefit has protected the surviving spouse as was intended originally.
  
• Simpler paperwork: When you apply for a joint policy some of the information will apply to both parties (think address, banking, etc.) so the application is simpler because this information only gets asked for once.
  
• Estate planning goals: This applies really well with joint last-to-die policies.  Estate planning is often done to ensure that there are funds to offset taxes and transfer wealth to the next generation efficiently.  The best timing for this is at the last death between spouses so a single policy that covers both partners and pays out the death benefit at the second death is an ideal solution for estate planning.

When Joint Life Insurance Doesn’t Make Sense

• Unequal health: One person with poor health can create a situation where the premium for a joint policy exceeds what you would pay if you applied for separate policies.  
  
• Smoking Status: When one person smokes this may also affect the premium rates enough that separately owned life insurance makes sense financially.
  
• Different Incomes or insurance needs: Therefore, since the premium is calculated based on the death benefit amount, if there is a significant difference in the needs analysis it may make sense to own separate policies to avoid paying a higher premium for more than the need that exists for one of the partners.  
  
• Desire for control over beneficiaries: If you want to be able to name different beneficiaries or split the death benefit among many beneficiaries it is often better to avoid joint first-to-die life insurance plans and choose individually owned policies.
  
• Divorce/separation risk: If you have a joint policy and there is a marital breakdown both parties need to agree on any changes to the policy.  Depending on how amicable the separation is this can create issues. 
  
• Flexibility to adjust later: Since there are two people insured and joint owners on a joint policy making changes in the future has an added level of difficulty.  Both parties typically would need to agree and remain in good health to make any adjustments to the policy in the future.

Expert Advice

As a licensed advisor with 15+ years helping Canadian families I know that after they say ‘I do’ and start a new life together couples often think about getting life insurance to protect one another financially.  Taking the time to determine what type of coverage, jointly owned or individual policies, fits your situation best is worth every second because it only makes your life easier as your relationship grows.   — Simon Huften, President of LifeInsuranceCanada.com

Still Confused About Joint vs. Separate Life Insurance? Use this Flowchart to Decide

Question #1: Do you expect to change coverage, beneficiaries, or cancel your policy in the next 10–20 years?

• Yes → Go with separate life insurance policies for flexibility
• No → A joint life insurance policy may be sufficient
  

Question #2: Do you and you spouse/partner have similar needs and financial goals?

• Yes → A joint policy can work in your situation
• No → Separate policies suit this circumstance better
  

Question #3: Is your priority for life insurance to protect your spouse/partner if you die first?

• Yes → A joint policy can work well for this need
• No → Individual policies may be the best choice
  

Question #4: Do both of you want the same insurance coverage amount?

• Yes → Joint policies can work in this circumstance
• No → Individual polices may work better here
  
  

12. Common Mistakes Married Couples Make With Life Insurance

Life insurance is something that people often think of at points in their lives when, if something unexpected happened to them, there would be a financial impact on someone they care about. One of the big events that we see triggering this thought is when a couple gets married. Newlywed couples understand that they now have someone else relying on them and they seek out ways to protect their new family. There are a few common mistakes that we see couples make with life insurance and thought that we could help you avoid them.

1. Not getting life insurance: Clearly this is the biggest mistake of all. Not getting insurance leaves people you care about at risk of major financial issues if you pass away unexpectedly.  
   
2.  Not getting enough insurance: In other words, underestimating how much coverage you need could leave someone you care about in a financial pinch. Make sure you do a needs analysis to figure out how much life insurance you need.
   
3.  Thinking that you have insurance at work: Sure, your group benefits may provide you with some life insurance, but it is rarely enough. It also assumes that you will still be working at the same job and be under the age of 65 when you die to receive that amount.  While it can be a part of your plan, your employer benefit plan life insurance should not be your entire plan.
   
4.  Buying the wrong type of policy: Take the time to analyze your individual situation and make sure that you don’t buy a joint policy when you really need individually owned policies. 
   
5.  Only insuring one spouse: When there is a ‘primary bread winner’ in a house we often have people suggest that this is the only person that needs life insurance because of their income.  This would be correct if income was the only thing that mattered. But this isn’t the case, household operation, debt management and many other factors enter into picture when figuring out life insurance needs, not just who makes the highest income. 
   
6. Not reviewing your policy: Life changes, your life insurance needs will change over time as well. Changes to your career, where you live, having children are all examples of things that could result in your life insurance needs changing and if you don’t review your coverage to make sure it is keeping up with what you need you run the risk of a shortfall.
   

13. Expert Advice From Canadian Life Insurance Professionals

Simon Huften, the president of LifeInsuranceCanada.com, brings over 15 years of experience in the life insurance industry in Canada and has helped thousands of Canadian families set up life insurance plans that protect them in the event of an unexpected death.  When asked about the choice between a jointly owned life insurance policy and separately owned policies for a newlywed couple Simon’s thoughts are:

“It is true that joint policies can save you some money in the short term, but the flexibility to make changes in the future with joint policies is limited and when you lose that flexibility it can cost more in the long run.” – Simon Huften, President of LifeInsuranceCanada.com

14. Top 5 FAQs About Joint Life Insurance for Married Couples

Before You Decide: If you still aren’t sure what the best fit is for you and your family, take the time to reach out and speak with licensed life insurance advisor who will take the time to get to know you and your unique needs and help guide you to the best solution.

15. Real-Life Case Study: Comparing Two Canadian Couples

Let’s take a second and consider two newlywed couples that have made the choice to say ‘I do’ when you ask them if they need life insurance. The first couple decide to get a joint first-to-die policy. The second couple decide that they also want life insurance but instead of a joint policy they choose to get separate policies. As we all know, life has its way of throwing us curveballs and both couples end up with one person having health issues that arise a few years after the original policy is in place.

Couple A: For Couple A, they have applied for a joint policy and picked a $250,000 death benefit. They didn’t do a needs analysis, they just picked a number that sounds like a lot of money.  Let’s say that they are reviewing their coverage about 10 years after they purchased it and they are in a situation with their shared policy and they are facing some tough choices.  It turns out that while yes, $250,000 is a lot of money, they finally completed a needs analysis and discovered that it’s nowhere near the amount that they need. In fact, it wouldn’t even pay off their mortgage if something happened to one of them. The other thing that the needs analysis revealed is that they don’t both need the same amount of coverage.  In fact, one spouse needs $750,000 and the other needs $1.5 million for the death benefit to support all the financial needs.

Couple B: In contrast, Couple B chose to take out separate life insurance policies. Again they randomly chose their death benefit at $250,000 and now when they are reviewing things they find that when they actually do a needs analysis they are in the same situation. One spouse would need $750,000 and the other would need $1.5 million if anything happened to the other. 

Couple A with their shared policies face some unexpected challenges:

When they figure out that they are under insured, couple A tries to remedy the situation but if you recall, one of the partners has had health issues arise so they aren’t really able to make adjustments to the joint policy that they have without it costing them a much higher premium. The fact that one partner is unhealthy now works against the spouse that remains in good health. The flexibility with a jointly owned life insurance policy is limited because it requires two people to be in good health for one single policy. 

Couple B Separate Policies, Better Fit

Now if we look at couple B they have far more flexibility because they took out separate policies. The partner whose health has changed is able to keep their original policy, issued when their health was good, and make the decision about supplementing with a new policy that, while they will have to pay higher premiums for it, will cost less than the couple with the joint policy. The spouse who is healthy can then readdress their policy at the standard rates and get the coverage they need. There is far more flexibility available in these situations where policies are individually owned.

16. Downloadable PDF: Joint vs. Separate Life Insurance Policies Worksheet (PDF)

Now that you understand the differences between joint and separate life insurance policies, download this worksheet to compare your options and prepare for a conversation with your advisor.

Download Joint vs. Separate Life Insurance Policies Worksheet (PDF)

17. What Most Married Couples Overlook About Joint Life Insurance Policies

The initial thought most people have when it comes to owning a joint life insurance policy is that it is the better option when buying life insurance for married couples, because you can save some money based on the simple fact that the insurer only has to issue one policy instead of two. Why does this save you money? Every policy has fixed costs associated with it. From the most basic of actually printing out the policy document to all of the administration that goes along with the policy there are costs to the insurer for every policy they issue. So if you choose a joint policy to cover two people you only pay one set of those costs. Obviously you save money. But there are trade-offs that you need to account for. One of the biggest questions that comes up after the joint policy has been issued is can we make a joint life insurance policy into two individual policies later on? This question will often come up when there has been some sort of relationship breakdown when the people who are insured on the same joint policy are faced with no longer living together but still sharing a life insurance policy.  

Can You Convert a Joint Policy to Two Individual Policies Later?

In most cases the answer to this question is no. You may be able to find an insurer that may allow you to convert a joint policy to two individual policies within the first few years of the policy’s life, but they often limit the individual policies to having 60% of the joint policy death benefit amount. You really need to understand what the rules are for the insurers you are dealing with prior to purchasing the policy.

Why It Matters

• Joint life policies are hard to split if you separate or divorce.
• Spouse’s health can affect your policy too.
• It’s harder to change or update the insurance policy later on.
• You can’t tailor the insurance coverage to fit each spouses situation.

A Realistic Example

Why does the ability to convert a joint policy matter? Say you have a joint life insurance policy that you took out many years ago and now you are faced with the desire to split it into two individual policies after something like a marital breakdown happens. Unfortunately, since the first policy was issued you have experienced deteriorating health and can’t qualify for standard rate life insurance any more. The idea of converting a policy is really appealing under these circumstances because a conversion eliminates all the health questions. Some policies may come with a limited time window after the policy is issued to split it into individual policies but this often comes with a reduced death benefit amount, for example each individual policy can only have 60% of the original death benefit. This makes the choice difficult because it often leads to a spot where if you are able to convert a joint policy to individual policies both partners end up in a situation where they are under insured.  

Broker Insight

18. Conclusion: How to Make the Right Decision With Confidence

The decision to get married is a big one. When a couple says ‘I do’ to the idea of creating a life together they often end up in a circumstance where they realize that if something unexpected happened to them and they were to pass away someone that you love will be impacted both emotionally and financially. Deciding to take out life insurance for married couples or as newlyweds is a wonderful way to help eliminate part of the stress that would happen if someone passes away. We’ve taken the time here to talk about the pros and cons of how you structure that coverage for you and your spouse. Having an open discussion with your partner about all of your financial goals and plans is always a wonderful idea. When the topic of life insurance and how to structure the ownership of the policy comes up there’s no one-size-fits-all answer. Take the time to talk to a licensed life insurance advisor that can guide you through the choice to make sure that you end up in the best solution for your unique situation. This conversation is never a bad choice.