Joint Life Insurance: A Shared Financial Safeguard

There comes a point in your financial life when the focus naturally broadens. For years, most of your planning is about making sure you and your partner are covered—income, savings, retirement, the basics. But as your wealth grows or life shifts, a different question appears: What happens to all of this when I’m gone?

It’s a practical shift above all else. You start looking ahead and realizing there are logistical questions to sort out—how taxes will be handled, how assets will be passed down, and whether everything will land where you intend without unnecessary complexity.

Joint life insurance — particularly a second-to-die or survivorship policy — often becomes relevant at this stage.

What joint life insurance actually is

A joint policy insures two people, most often spouses, and pays out after both have passed away. That design makes it fundamentally different from traditional life insurance, which provides income support to a surviving spouse after the first death.

Long-term estate and legacy planning is typically used for survivorship coverage. Because the benefit is delayed until the second death, premiums are often lower than maintaining two individual policies. And in many cases, the policy is owned by an irrevocable trust — commonly an ILIT — to keep the proceeds outside the taxable estate.

Why some families may consider it

Joint life insurance becomes relevant when families begin planning not just for their own needs, but for the people and priorities that will carry their story forward. Survivorship coverage supports that work by addressing a narrow, high-stakes set of estate-planning challenges.

Estate taxes are often the initial trigger. Because the OBBBA raised the federal exemption to $15 million per person and made it permanent, the sharp 2026 sunset many families were preparing for has been avoided. But even with a higher exemption, many households still expect their estates to exceed those limits through real estate, a private business, or concentrated stock. Without adequate liquidity, heirs may be forced to sell assets quickly to cover taxes, sometimes at the worst possible time. A second-to-die policy may provide the liquidity needed to preserve what the family intends to keep.

In some situations, the policy may help create balance. Families with blended structures or children with different relationships to a family business may use joint life insurance as one way to help equalize inheritances without disrupting ownership. In some cases, it can serve as a tool to support fairness while preserving long-standing assets.

Trust planning is another common motivation. Families may use a survivorship policy within an ILIT to create a long-term resource for future generations, support charitable intentions, or care for someone who will need lifelong financial stability. In this context, the policy is a mechanism for intentional legacy design.

For households with illiquid wealth, joint life insurance offers a practical way that may support estate goals without compromising investment strategies or selling meaningful assets to create future liquidity. It may help keep long-term plans intact while providing flexibility for those who will inherit.

Across these scenarios, the emphasis is not on the policy itself but on what it protects—a family business, a decades-long investment strategy, or a carefully structured estate plan shaped by intention rather than urgency.

What families deserve to know up front

A clear decision requires understanding both benefits and limitations.

A joint policy pays no benefit at the first death, which means it doesn’t provide income replacement or immediate liquidity for a surviving spouse. Pricing is also heavily influenced by the second spouse’s health; if one partner is older or has medical conditions, premiums can rise significantly.

Many policies use universal or variable universal life structures, which means long-term performance depends on interest rates, markets, and appropriate funding. Without periodic review, the policy may require additional premiums later in life.

When a trust owns a policy, it requires ongoing administration — Crummey notices, premium funding, and coordination with estate attorneys. Premium financing comes with risk: interest-rate exposure, collateral requirements, and the possibility of refinancing challenges. These factors don’t necessarily diminish the value of joint life insurance, but they should be part of the conversation from the start.

A better framework for the decision

Most families find clarity by returning to the questions beneath the strategy:

• What do we want our wealth to accomplish for the people we love?
• Which assets do we want to preserve for future generations?
• How do taxes, liquidity, and timing influence that plan?
• What structures support our intentions with the least complexity?

When those answers are clear, the role of joint life insurance—if any—comes into focus naturally. The goal is intentional, long-term alignment between your resources and your legacy.

Is joint life insurance a fit for you?

Joint life insurance may be appropriate if your estate is projected to exceed post-2026 tax thresholds, if you want to preserve illiquid or long-held assets, or if you’re building a multigenerational estate plan using trusts. It may also be relevant for families looking to create balance in complex inheritance situations.

It may be unnecessary if your estate is unlikely to be taxable, if the surviving spouse needs income support sooner, or if policy complexity doesn’t match your planning priorities.

Joint life insurance may play a meaningful part of a long-term legacy plan, especially when paired with trust structures and intentional estate design. The families who benefit most are those who begin with clarity — what matters, what should endure, and how they want their heirs to experience the wealth they leave behind.

About the Author: Katy McDonald, CFP®, is a Lead Advisor at Brighton Jones. She helps high-income professionals and families design tax-efficient investment strategies and retirement plans aligned with their values and long-term goals.

This content is for informational and educational purposes only and should not be construed as individualized advice or a recommendation for any specific product, strategy, or course of action. Brighton Jones, its affiliates, and employees do not provide personalized investment, financial, tax, or legal advice through this communication. This material is not intended to, and does not, create a fiduciary relationship under ERISA or any other applicable law. For individualized advice tailored to your specific circumstances, please consult with your adviser.