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Joint First-to-Die Life Insurance: A Smart Financial Move for Canadian Couples

Joint First-to-Die Life-Insurance in Canada
Joint First-to-Die Life-Insurance in Canada

Joint first-to-die life insurance in Canada provides financial protection for couples when the first spouse passes away.

But how does this type of insurance work? What are the pros and cons? Who is it best suited for? This comprehensive guide examines everything you need to know about joint first-to-die life insurance with life buzz – The biggest life insurance newspaper in Canada.

What is Joint First-to-die Life Insurance ?

What is Joint First-to-die Life Insurance in Canada at lifebuzz.ca
What is Joint First-to-die Life Insurance in Canada at lifebuzz.ca

Joint first-to-die life insurance in Canada covers two people under a single policy and pays out the full death benefit when the first insured individual dies. The payout is made directly to the surviving partner or named beneficiaries.

This can provide funds for income replacement, debt repayment, business buyouts, and financial stability when one member of a couple passes away prematurely.

These policies are available from most major Canadian life insurance companies as either term life insurance or permanent life insurance:

Term life insurance offers pure protection for a set period like 10, 15, 20 or 30 years. It does not build cash value.

Permanent life insurance provides lifetime coverage along with tax-advantaged cash value that accumulates over time. Types include whole life, universal life, and participating life.

The critical feature of joint first-to-die insurance is that it can only pay one death benefit throughout the policy. Once a claim is made, the policy terminates. Some insurers offer conversion options as outlined below.

Joint first-to-die life insurance is vital in securing financial safety for the surviving spouse when one income is lost unexpectedly.

How Does Joint First-to-die Life Insurance Work in Canada?

Joint first-to-die life insurance works through a single application covering both partners. When the first insured individual dies, the surviving policyholder receives the full sum insured in a tax-free lump sum payout.

The policy then terminates unless the survivor exercises conversion options. Many policies allow converting to an individual permanent policy with no underwriting within 30-90 days after the first death.

This allows continuing coverage later in life when new insurance would be much more expensive or unattainable.

Some insurers also offer a term conversion option to a new term policy up to the original coverage amount with no medical underwriting upon the first death.

These conversion privileges provide important flexibility for the surviving spouse. However, not all joint first-to-die insurance policies guarantee conversion options, so this is an important consideration when choosing a policy.

What Are the Pros and Cons of Joint First-to-die Life Insurance?

Joint first-to-die life insurance in Canada offers several advantages but also has some disadvantages:

Pros:

  • Cost savings compared to two individual policies
  • Allows an unhealthy person to get coverage
  • Built-in permanent and Term conversion options
  • Access to living benefits like critical illness insurance
  • Potentially higher death benefit limits

Cons

  • Inflexibility if the relationship changes
  • Limits on qualifying for preferred rates
  • Earlier age cut-offs for privileges based on single equivalent age
  • No cash value accumulation on term policies
  • Longer premium payment commitment

Ultimately, joint first-to-die insurance can provide affordable spousal protection but may not be ideal if flexibility is paramount.

How To Get The Best Joint First-to-die Rates in Canada
life buzz quote in canada new 8 1
How To Get The Best Joint First-to-die Rates in Canada

Who needs Joint First-to-die Life Insurance in Canada?

Joint first-to-die life insurance is best suited for:

  • Younger couples needing affordable mortality protection
  • Business partners funding buy-sell agreements
  • Couples where one spouse is uninsurable individually
  • Budget-conscious families unable to afford two policies
  • Second marriages to cover just the new spouse
  • Parents ensure adult children are still financially dependent


The cost savings and simplified underwriting make joint first-to-die policies very appealing to these groups.

Where Can You Buy Joint First-to-die Life Insurance in Canada ?

Joint first-to-die life insurance is available from:

  • Life Insurance brokers with access to policies from many top insurers
  • Directly from major insurance companies
  • Financial advisors, though product access may be narrow
  • Online insurance marketplace like IDC Insurance Direct Canada


Canadians have ample options to purchase joint life insurance coverage. Working with an experienced broker is highly recommended to help compare policies across multiple carriers.

How Do You Get the Best Joint First-to-die Life Insurance Rates in Canada ?

Follow these tips when shopping for joint first-to-die life insurance to maximize savings:

  • Compare quotes from at least 5-10 different insurance providers
  • Prioritize preferred underwriting by having both partners undergo extensive medical underwriting
  • Opt for longer 20 or 30-year terms over ten years
  • Reduce premium frequencies from monthly to annually
  • Improve health through lifestyle changes
  • Review exclusions and buy optional riders to fill gaps
  • Bundle policies together to qualify for multi-policy discounts


Securing preferred underwriting for both spouses is key to accessing the lowest joint rates.

How Much Does Joint First-to-die Life Insurance Cost for Canadians ?

Joint first-to-die premiums depend on the following:

  • The ages of both individuals
  • Health ratings and medical histories
  • Amount of total coverage
  • Length of the policy term
  • Riders like critical illness or disability

Here are sample monthly costs for $1 million of coverage for healthy, non-smoking couples:

Term Length30-year-old Couple40-year-old Couple50-year-old Couple60-year-old Couple
10-year term$41$80$205$649
20-year term$66$142$386$1,328
30-year term$128$277$775N/A
Source : Joint First-To-Die Life Insurance: Pros and Cons – briansoinsurance

Joint first-to-die premiums can be 5-30% lower than two individual policies. However, health conditions may reduce potential savings.

How Much Does Joint First-to-die Life Insurance Cost?
How Much Does Joint First-to-die Life Insurance Cost in Canada?

How Does Joint First-to-die Insurance Compare to Other Policy Types?


While joint first-to-die insurance offers cost savings, other policy types have advantages that may be more appropriate depending on needs:

  • Joint last-to-die life insurance – Better if the goal is to leave a large inheritance but much higher premiums
  • Individual policies – Offer more flexibility if the relationship changes, but cost more
  • Group life insurance – Lower rates, but coverage ends upon leaving employer
  • Term life insurance – Affordable temporary coverage but no lifelong protection
  • Permanent life – Lifelong coverage and tax-deferred cash value accumulation


There is no one-size-fits-all best life insurance product. The right solution depends on the personal financial situation, budget, and coverage duration required.

When is Joint First-to-die Insurance the Right Choice?

Assessing whether joint first-to-die insurance is the right approach involves evaluating the following:

  • Need for flexibility if the relationship changes in the future
  • Whether customized separate payouts are desired for each partner
  • Budget constraints and maximizing total life insurance amount
  • If health issues make joint insurance the only or lowest-cost option
  • Alignment with estate planning and intended beneficiaries


Consulting an experienced life insurance advisor can provide guidance about suitability for specific circumstances.

How Does the Application Process Work for joint first-to-die life insurance in Canada ?


Here is an overview of the process when applying for joint first-to-die life insurance:

  • Determine appropriate coverage amount based on financial needs
  • Get premium quotes from an life insurance agent or broker or advisor.
  • Select preferred carrier, terms, benefits, riders, and premiums
  • Both partners complete detailed applications and assessments
  • The insurer reviews submissions and issues final underwriting rating
  • If approved, the policy is issued once initial premiums are paid
  • Re-evaluate coverage annually as life circumstances evolve

The application process typically takes 4-8 weeks. Additional medical exams or records may be requested during underwriting.

Read more : Life Insurance For Couples in Canada

What Questions Should You Ask When Evaluating Joint First-to-die Life Insurance?

When considering joint first-to-die life insurance, important questions to ask include:

  • Does the policy allow conversion to permanent life insurance without new underwriting of health declines? What is the conversion deadline age?
  • Is there an option for the survivor to purchase a new term life policy upon the first death without new underwriting? What are the qualifications and restrictions?
  • What are the eligibility requirements related to age, health, smoking status, or other factors?
  • What exclusions exist that may disqualify death claims under certain circumstances? Are additional riders available to cover exclusions?
  • Does the policy accumulate any cash value if structured as life insurance in Canada ? How does this impact premiums?
  • What optional riders are available, such as waiver of premium, accidental death, or critical illness? How much do they add to the costs?
  • What discounts may be available, such as for paying premiums annually, bundling policies, or applying online?
  • What is the process if the relationship ends in divorce? Is there an option to split the policy?
  • Thoroughly understanding the fine print is crucial when evaluating the appropriateness of joint coverage.

What Mistakes Should Be Avoided When Applying for Joint First-to-die Insurance?

When going through the application process, common mistakes to avoid include:

Not accurately determining the right amount of total coverage required. Failing to account for all income replacement needs and debts can leave loved ones underinsured.

Neglecting to compare multiple carriers and policy options. Rates and features can vary widely across providers.

Skipping recommended medical exams that could help obtain preferred underwriting discounts. Better health equals lower premiums.

Providing incomplete or inaccurate information on applications. This can lead to denial of claims down the road.

Not reading and understanding exclusions and limitations related to certain health conditions or causes of death.

Overlooking the differences between term lengths. Opting for ten years means much higher renewal rates later.

Forgetting to re-evaluate coverage as life circumstances change. Needs to evolve over time.

Not consulting an experienced advisor. Navigating joint insurance intricacies without expertise can lead to mistakes.

Avoiding common pitfalls takes guidance from seasoned life insurance professionals.

Why Work With an Advisor for Joint First-to-die Insurance?

Key reasons to involve an advisor when exploring joint first-to-die insurance include:

Knowledge – Advisors are experts in joint policy intricacies, tradeoffs, pricing, and regulations that consumers typically lack. This prevents costly mistakes.

Policy Access – Advisors have access to the full marketplace of policy options across dozens of insurance carriers. This enables finding the optimal policy.

Objectivity – Unlike tied agents, independent advisors offer unbiased guidance on the best solutions for specific circumstances.

Ease – Advisors simplify the complex process. They handle applications, underwriting, negotiations with insurers, and explain policies in plain English.

Ongoing Support – Advisors provide ongoing policy management, updates as needs change, and assistance with everything from questions to claims.

The right advisor brings expertise and advocacy that ensures the ideal joint first-to-die life insurance solution.

Summary – Key Takeaways About Joint First-to-die Insurance

In summary, here are key takeaways to understand about joint first-to-die insurance in Canada:

It can provide affordable coverage for couples when structured appropriately.

Joint policy premiums are generally lower compared to two separate policies.

Conversion options are important to research when comparing policies.

It is ideal for young families, business partners, second marriages, and couples on a budget.

Drawbacks include a lack of flexibility and limits on preferred underwriting.

Work with an advisor to ensure it aligns with your specific situation.

Pay close attention to policy exclusions, conversion provisions, dividends, discounts, and other details.

Adapt coverage over time as relationship dynamics and financial obligations evolve.

Joint first-to-die life insurance requires expert consultation and research to determine if it offers the right spousal protection strategy for your needs and circumstances.


Frequently Asked Questions

What happens to joint first-to-die insurance after the first death ?

The policy terminates after paying the death benefit to beneficiaries after the first insured’s death. The surviving spouse would need to apply for a new individual policy.

What are the advantages and disadvantages of joint first-to-die insurance in Canada?

Advantages are lower premiums than two separate policies, easier qualification if health issues exist, and built-in conversion options. Disadvantages are lack of flexibility if relationships change, limits on preferred underwriting, and age-related provisions based on single equivalent age.

Who is joint first-to-die insurance best for in Canada?

It works well for younger couples, business partners, those with budget constraints, second marriages, couples where one is uninsurable, and financially dependent parents and children.

Read More : Life Insurance for Kids in Canada

Why would a Canadian couple choose joint first-to-die life insurance?

Reasons to choose it include lowering life insurance costs, maximizing total coverage amount, allowing an unhealthy spouse to qualify, and efficiently funding buy-sell agreements.

When should you avoid joint first-to-die insurance in Canada?

Avoid it if relationship stability is a concern, if large separate payouts are desired, if estate planning goals don’t align, or if you want permanent coverage with cash value accumulation.

Where can Canadians purchase joint first-to-die life insurance policies?

Policies are available from insurance brokers, directly from insurance companies, financial advisors, and online secure tool IDC insurance.

What is the typical cost of joint first-to-die life insurance policies in Canada?

Costs vary based on ages, term length, and death benefit amount. Sample monthly premiums for $1 million coverage: 30-year-old couple – $41 to $128; 40-year-old couple – $80 to $277; 50-year-old couple – $205 to $775.

What are tips for saving money on joint first-to-die life insurance ?

Tips saving money on joint first-to-die life insurance in Canada include comparing quotes, choosing longer terms, improving health, looking for discounts, paying annually, and bundling policies.

Can you split a joint first-to-die policy in Canada upon divorce?

Some policies allow splitting after divorce, usually within a certain time period. Other policies require completely reapplying if the relationship ends.

Is the payout from joint first-to-die insurance taxable in Canada?

In most scenarios, the death benefit payout to the surviving spouse or beneficiaries is not taxable for Canadian policies.

Can you convert joint first-to-die life insurance policies to permanent insurance?

Many policies allow converting to permanent life insurance later regardless of health changes. This provides flexibility as your needs evolve.

Who is joint first-to-die insurance best for in Canada?

It works best for couples with debt replacement, income replacement between earners, or business buy-sell needs. Individual policies may be better if you need separate payouts or maximum age cutoffs.

How long does joint first-to-die insurance pay out after death?

The insurer will pay the claim within a few weeks of receiving proof of death documents and verifying beneficiary information.

Can you split a joint first-to-die insurance policy into two individual policies?

Some insurers allow splitting joint policies, but others don’t. Check if this flexibility is available, as your situation may change.

Do both insureds on a joint first-to-die policy need to qualify medically?

Yes, both applicants must meet the insurer’s health criteria. If one person is uninsurable, joint coverage may not be an option.

Is the payout on joint first-to-die life insurance policies taxable?

Like other life insurance, the tax treatment depends on who owns the policy. Payouts to named beneficiaries are generally non-taxable.

Does joint first-to-die insurance build cash value?

No, these are term life insurance policies that provide temporary protection. Permanent life policies are required to build cash value.

Can you get a joint first-to-die term to age 100?

Joint coverage is usually available up to the age of 90 or 95. Term to 100 is rare but offered by some insurers – shop policies with longer terms.

What age is best to buy joint first-to-die life insurance in Canada ?

Your 30s or 40s allow maximum time to pay off debts before age cutoffs apply. I am waiting until older ages increase premium costs.

Does smoking affect joint first-to-die insurance rates in Canada ?

Yes, if either insured is a smoker, tobacco use will result in much higher premium costs. Both applicants should be non-smokers.

Read more : Life insurance for smokers

Is joint first-to-die or second-to-die better?

First-to-die works well for debt repayment needs before the survivor retires. Second-to-die can provide income during retirement.

Aricle Sources

For a deeper look at our dedication to accuracy, transparency, and independence, please refer to the Lifebuzz Editorial Policy. We take great pride in being Canada’s most trusted life insurance news source :

  1. Joint First to Die Life Insurance: How Does It Work? – dundaslife
  2. Joint life insurance policies – Bankrate
5/5 - (2 votes)

Written by Ben Nguyen

Ben Nguyen is an award-winning insurance expert and industry veteran with over 20 years of experience. He is the chairman and director of IDC Insurance Direct Canada Inc., one of Canada's leading online insurance brokerages.

Ben is renowned for his extensive knowledge of life, health, disability, and travel insurance products. He is the prolific author of over 1,000 educational articles published on LifeBuzz, BestInsuranceOnline, and InsuranceDirectCanada. His articles provide Canadians with advice on making smart insurance decisions.

With a Bachelor's degree in Actuarial Science and a Fellow of the Canadian Institute of Actuaries (FCIA) designation, Ben is frequently interviewed by media as an insurance industry spokesperson.

He has received numerous honors including the Insurance Council of Canada’s Pivotal Leadership Award, the Canadian Insurance Hall of Fame induction, and the President’s Medal from the Canadian Institute of Actuaries.

Ben continues to shape the vision and strategy of IDC Insurance Direct as chairman. He is dedicated to advancing the insurance industry through his insightful leadership.

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