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Can couples save money by buying life insurance together?

Do you prefer to learn by watching? We answer this question in a video below. Click here to jump ahead.

Buying in bulk is almost always a great way to get a lower price on something, thanks to the way that most products are produced. “Buy one get one” deals are everywhere in supermarkets and stores, but is life insurance the same way?

Can I save money if both my partner and I buy from the same insurance company?

No. If you and your partner both need life insurance, it’s not any cheaper to buy at the same time nor is it cheaper to both buy from the same insurance company. In fact, you may actually pay more if you both go with the same insurance company depending on your individual risk factors.

For example, let’s say a husband and wife are each applying for a term life insurance policy and both go with Banner Life insurance company. However, the husband has a small private plane and occasionally he and his wife take short getaway trips. Principal Financial Group is the best insurance company we have for private pilots. By staying with Banner Life, he would actually pay more than if he would instead apply to a different company than the one his wife is applying to.

(Don’t worry, you don’t have to know which insurance companies are best for specific health or lifestyle factors. Quotacy does that research for you.)

Can two people apply for a cheaper “two-for-one” policy, so that when either one dies, the other would get the payout?

Some carriers do offer two-person policies that pay out whenever one applicant dies (often called a “First-To-Die” policy), but they are always more expensive than buying two separate policies, primarily because of the way that insurance carriers calculate the price of a policy.

The Price of a First-To-Die Plan

You see, when a person applies for a regular term life insurance policy, the price of the policy is determined based on the factors that make that person more likely to die and riskier to insure. It’s determined on an individual basis, and your price is affected only by your own health and lifestyle conditions. In a first-to-die plan, on the other hand, any health and lifestyle risks from one applicant are marked as risks for the entire policy.

For example: consider a husband and wife. Bill is a 38-year-old male, Grace is a 38-year-old female, and they’re both applying for the same amount of coverage. Both are fairly healthy, but each carries a few risk factors. Bill is a veteran rock climber, and spends his vacations scaling cliffs. Grace plays it a little safer, but her father died of heart disease a few years ago, so she has a heightened insurance risk due to her family history.

If they were to apply for two separate policies, insurance carriers would see both of their applications like the graphic below. Since men are statistically more likely to die earlier than women, a male applicant will always have a slightly higher cost than an equal female applicant. After the base cost, the risks are factored into the cost of the policy, with each risk factor raising the price of the person it came from.This graphic shows how prices are set. each risk class is stacked on the basic policy cost, like blocks.

Since the policy needs to cover two people, the odds that one of the applicants dies and the policy needs to pay out are doubled – even before the risk factors are applied. This raises the price of a first-to-die plan drastically.

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To calculate the price of a first to die policy, insurance carriers combine the risks for both applicants, since they’ll have to pay out if either one of the applicants dies during its duration. This means that they need to apply a risk class to both applicants as a unit, not just the individuals. For Bill and Grace, the carrier would start by taking the base price for covering two people, and applying every additional risk class to both of them, since the policy needs to pay out if either applicant dies.A First-to-Die plan applies risk classes across both people. Theylengthen the stacked blocks to cover both people's basic costs.Since the policy needs to cover two people, the odds that one of the applicants dies and the policy needs to pay out are doubled – even before the risk factors are applied. This raises the price of a first-to-die plan drastically.The final prices of these types of plans can be visualized by these blocks. First-to-die policies will always cost more than two normal term policies.Due to this immense price difference, first-to-die plans have fallen out of vogue, and some carriers don’t actually offer these plans anymore. Some other companies still offer a dual plan for life insurance, but those are generally much more expensive than two individual plans.

Long story short, if you’re looking to get another person insured with us, we recommend getting separate quotes at Quotacy to see what the cheapest price would be for both applicants individually, and then applying for policies individually to get coverage. It’ll offer you the same coverage, with a lot less stress on your bank account.


Watch the Can Couples Save Money on Life Insurance Video

Video Transcript

Welcome to Quotacy’s Q&A Friday where we answer your life insurance questions. Quotacy is an online life insurance broker where you can get life insurance on your terms.

I’m Jeanna and I’m Natasha.

Today’s question is:
Can married couples save money on life insurance?

Today’s consumers are used to being able to get discounts if we buy more than one of something. So it’s no surprise that one of the most common questions our agents get is whether or not couples can save money by buying policies together.

With life insurance there are no promo codes or buy-one-get-one deals. The cost of your life insurance policy is based on your individual risk factors. So, it doesn’t matter if you and your spouse buy the same type of life insurance, at the same time, from the same insurance company or not.

As a matter of fact, if you both decide to go with the same insurance company versus shopping around you may end up paying more than necessary.

Just as an example, let’s say a husband and wife are both applying for individual life insurance policies. They decide to apply to John Hancock simply because they’re familiar with the brand and figure it’s easiest to stick with one company. However, the husband has asthma and Prudential is one of the best insurance companies for asthmatic individuals.

comparing life insurance prices for asthma applicants for Quotacy blog

Because this husband and wife didn’t shop around, the husband will likely pay higher premiums simply because John Hancock isn’t as lenient with asthma as Prudential is.

There’s no rule that says a married couple has to apply with the same life insurance company. The wife could buy her life insurance policy through John Hancock and the husband could buy through Prudential.

Figuring out which insurance companies to apply to isn’t hard if you work with an independent life insurance broker like Quotacy. A broker isn’t tied to one insurance company and can therefore shop your case around to multiple different life insurance companies.

You and your spouse can both apply online in less than five minutes on Quotacy.com and then your dedicated agent will review the health and lifestyle information you provide on your application to make sure you’re matched with insurance company that will give you the best rate.

There are hundreds of factors that can potentially affect the cost of your life insurance policy: your gender, your age, your job, your hobbies, tobacco use, your driving record, your criminal record, your medical history, your family’s medical history… it’s really quite a long list, and many life insurance companies cater to particular niches. For example, some insurance companies are much more lenient with private pilots than others and some don’t care if you smoke marijuana while others might decline you for it. Quotacy can find that perfectly matched life insurance company for your individual situation.

And we’re not saying you and your spouse shouldn’t buy life insurance at the same time. By all means it would probably nice to go through the process together. At Quotacy, you and your spouse can even keep everything together on the same online dashboard. As you can see from the screenshot Mr. and Mrs. Smith are applying to two different life insurance companies.

screenshot of Quotacy online life insurance dashboard

Once received, their Quotacy agent will review the information on their individual applications for any risk factors that stand out. For example, if Mr. Smith has asthma or Mrs. Smith has anxiety. If there is a risk factor that may affect their final price, their agent will reach out and inform the applicant that Quotacy will anonymously shop their case across all other top-rated life insurance companies we work with to double-check that there isn’t a better match for them.

If there is a potentially better match, your agent will provide your options to you. It’s 100% your decision if you want to stick with your original company of choice or go with your agent’s suggestion. As you and your spouse’s applications move to the buying process your Quotacy agent will keep you updated every step of the way.

Before wrapping up we do want to point out that there are joint life insurance policies. These policies cover both spouses under one. However, these are uncommon for typical families.

A joint life insurance policy only pays out if one of you dies. A joint life insurance point can be designed as a first-to-die policy or a second-to-die policy. And it’s pretty self-explanatory.

With a first-to-die policy, the death benefit is paid out when the first spouse dies and then the coverage ends. With a second-to-die policy, the death benefit is paid out once both spouses have died.

To be clear this is not two individual life insurance policies rolled into one. Only one death benefit is paid out and not only that, the cost of a joint life insurance policy may not even be that affordable. When determining the price of a joint life insurance policy, the insurance company determines your policy premium off your combined risk factors. So if one of you is much older or much less healthy than the other the insurance company will set your price to cover those risks and therefore the younger, healthier spouse ends up paying more over the life of the policy than he or she would have had they just bought their own individual policy. Joint life insurance policies are useful in certain situations but most families just need term life insurance.

Long story short, if you and your spouse both want life insurance, which is a good idea, apply for individual life insurance policies.

If you have any questions about life insurance make sure to leave us a comment. And if you’re ready to get quotes, check out Quotacy.com. We’re here to help you find the best deal on the life insurance you want.
Photo Credit to Ramakrishna Reddy Y  


About the writer

Headshot of Eric Lindholm, a life insurance writer, for Quotacy, Inc. New Year's Resolution

Eric Lindholm

Communications Coordinator

Eric started in Quotacy's sales department, but moved to marketing after helping hundreds of people through their life insurance buying journey. Aside from writing about buying life insurance, he also edits Quotacy's monthly newsletter, runs our YouTube channel and produces Real Life, our podcast. Eric lives in Minneapolis, where his coworkers are trying to convince him to take his humor into the spotlight. Connect with him on LinkedIn.