If you’re in a relationship, and you and your partner are both considering taking out a life insurance policy, you may be wondering about the pros and cons of single and joint life insurance policies.
A single life insurance policy is what you generally think of when you hear the term ‘life insurance’: cover for one person, which pays out if that person dies within the policy term, as long as you pay your premiums. The cost of any life insurance policy depends on lots of factors, including your age, health, job, and lifestyle.
What is joint life insurance?
As you might think, a joint life insurance policy is cover for two people on one policy for one monthly premium. The main difference is that it will pay out once, so the cover will end after the death of the first policyholder. If you’re insured under a joint policy and your partner dies, if you still need life insurance then you’ll have to take out a new single policy – and as you’re likely to be older than when you took out your joint policy, it’s likely to have higher premiums.
If your relationship ends, your insurance provider may be able to separate your policy. If not you’ll need to take out new policies to continue to be covered, so you’ll need to check with your insurance provider. If you and you partner each have a single life inusrance policy instead, you’ll remain covered either way – whether one of you dies or the relationship breaks down.
Why opt for joint cover?
So, you may be wondering why some people opt for a joint policy. If you and your partner already have shared finances and a significant shared financial commitment, like a mortgage, it can make sense to consider a joint life insurance policy which can be used to pay off the mortgage when one person dies. Joint policies also tend to be more affordable than two single policies – and this can be particularly helpful if one person in the couple would be more expensive to insure for any reason, whether it’s being a smoker or having a higher income to cover.
It can often be quicker and easier to make a claim on a joint policy as the money would normally go straight to the survivor if a successful claim was made. With two single policies the money could take longer to get to your loved ones. Unless placed into trust, money would normally be paid to the deceased’s estate and there may be inheritance tax due.
The verdict?
The choice of whether you should buy two single policies or one joint policy depends on your circumstances and reasons for buying life insurance. Evaluating the level of cover you and your partner each need, your relationship, and the cost of both options will help you decide what’s right for you.
