Hello,
Regarding Term Life Insurance:
Would a husband and wife have to take out individual and separate policies to protect each other ?
Or, is there some type of insurance, similar in cost to to the low-cost Term insurance policies available, that would protect both on a single policy; where one would collect if the other passed away, irrespective of which one ?
If so, what would this type be called ?
Thanks, B.
Back in the day some companies issued FIRST TO DIE policies, but they have fallen out of favor. I saw them used quite a bit to fund buy-sell agreements. I never actually saw one sold to a husband and wife, but that doesn't mean it didn't happen. Quite frankly, I'm not aware of any company that still issues these.
What we do see a lot of these days is a SECOND to die policy. This is usually intended to cover any estate taxes due when the LAST spouse dies.
Some carriers used to offer discounts on spousal coverage, but the spousal portion was usually a considerably lower amount - for example, if you purchased a $500K policy for your self you might be able to add a $50K rider for your wife and $5K riders for your kids. I'm not familiar with any TERM policies that do this, but I've seen in with permanent insurance.
Please let us know if you find a carrier that will issue a first to die policy, I'd be most interested in knowing who they are.
Gene E. Utterback, EA, RFC, ABA
Here is an article on it. There is a link to quotes.
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