Why would Alesandra need less life insurance if Luis passes away prematurely before her?

• A. Alesandra has higher income, and therefore a higher Social Security benefits
• B. Luis's death would reduce overall insurance premiums
• C. Alesandra's life expectancy increases
• D. The survivor would receive no benefits anyway

Answer: (B)

The important idea here is that life insurance needs and costs depend on how many lives are insured. If a policy covers both spouses and one person dies, you typically no longer need to insure that deceased life, so you can cancel or reduce that portion of coverage. As a result, you stop paying premiums for the deceased’s life insurance, lowering the overall premiums you’re paying. You may still keep some protection for the surviving spouse, but the total cost of insurance would be reduced after Luis’s death. The other options don’t address the cost change tied to losing coverage on one life.