What are the benefits of joint life insurance for couples?

Is it better to get my own life insurance policy or take out a shared (joint) life insurance policy with my partner? This is a question many married couples or long-term partners often ask.

But what is joint life insurance?

A joint life insurance policy covers two people under one policy and will pay out once if either person passes away during the policy term. The pay out will either be made on the:

• First death – The pay out will be made to the surviving party upon the first death, and the cover will then expire (this is the most common option).

Or

• Second death – This is when a pay out will only be made if both parties pass away during the policy term.

In this article, life insurance brokerage Reassured, explores the benefits and disadvantages of both joint life insurance and two single policies to help couples decide what’s right for them during these difficult economic times.

Benefits of joint life insurance

There are many benefits to having a joint life insurance policy, especially if you and your partner are on a budget. Here are 3 of the main benefits:

• It can help you save money

As you are paying for just the one policy between the two of you, it can save you up to 25-40% compared to two single policies. This is because there’s only one premium to pay between both parties.

• Helps to protect shared assets

Having a joint policy can help to protect any assets you may already share with your partner, like a mortgage. Having a shared policy will help provide cover so that the surviving partner can remain in the home should the worst happen.

• Only one application form to complete

This can make the process less time consuming as it is one application form which will require information about both of your health and lifestyles. It will also include details of your chosen policy and cover amount.

Disadvantages of joint life insurance

Although joint life insurance has many valid benefits, there are a few reasons as to why many couples opt for two single polices:

• Only one pay out is made

This means the surviving partner is left exposed and will need to secure a new policy at later date if they still require family financial protection, resulting in higher premiums at an older age. If you have children, two policies with potentially two separate pay outs may be more appropriate.

• Can be complicated in the event of divorce/separation

If you (the two named parties) decide to divorce, it can be quite difficult to split the policy. Depending on your insurer, you may or may not be able to split your policy. Some insurers will include a ‘separation option’ within their policies but others may not offer this.

• If one partner is high risk it can increase the premium price

If one person on the policy is considered ‘high risk’ (due to a high risk occupation, health risks, high BMI, dangerous hobbies etc) this can affect the premium you both have to pay (meaning the low risk partner could be paying more than is necessary).

What about a single policy each?

The alternative to a joint policy is two single policies. Here are some benefits and disadvantages of having two separate policies instead of a joint policy:

Benefits

• Loved ones could receive two pay outs

One of the downfalls of joint life insurance is the singular pay out. If you have two policies then you won’t have the worry that only the first partner to pass away is covered. You will also only have to pay a policy fitting your own situation (health and lifestyle) which could be cheaper if you are healthy and low risk and your partner is not.

• Secure a potentially greater level of cover

You could choose to cover the income and financial commitments of each person, potentially providing a bigger pay out than with a joint policy. 

Disadvantages  

• You’ll need to pay two premiums

With two single policies you’ll need to do everything separately. This includes filling out two application forms and paying two separate premiums.

• It can be more expensive

When taking out a joint policy you could be saving up to 40% on your premium, by having your own singular policies it could cost a lot more. This may not ideal if you are on a budget as a couple. 

As a couple, what is best for us?

As a couple it will be down to your personal circumstances whether a joint policy is right for you.

If it’s within your budget it can be possible to secure more than one life insurance policy.

This can be a good option to cover different things, under different policies. For example, one covering a mortgage and the other for funeral costs and an inheritance.

If you have shared assets and/or you’re on a tight budget, a joint policy could be well suited to help you save money.

Using an FCA-regulated life insurance broker or comparison website can help you compare quotes and explore all affordable options. These are quick and easy ways to secure a policy and receive detailed information from a professional, providing peace of mind and protection for your loved ones in the future.