When is a lower premium likely for a joint life last survivor policy compared to first death cover?

A joint life last survivor policy cover provides benefits only upon the death of the second insured individual, as opposed to a first death policy that pays out upon the death of the first insured. This fundamental difference in the timing of when the payout occurs means that the insurer faces less immediate risk of a claim.

With a first death policy, the insurer may have to pay out immediately upon one person's death, which increases the likelihood and frequency of claims. In contrast, the joint life last survivor policy minimizes this risk since the payout is delayed until both individuals have passed away, typically leading to a lower premium. The extended duration of coverage, coupled with the condition of two deaths needing to occur before a payout is made, contributes to the overall reduction in premium costs for this type of policy.

Understanding this risk structure is crucial, as it is central to insurance pricing and the considerations involved in deciding policy types. Options related to taxation, risk assessment in other manners, or notions of temporary coverage do not directly capture the key element of claim timing and risk exposure associated with the joint life last survivor policy.