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Joint life insurance

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What is joint life insurance?

Life insurance provides a cash lump sum to your loved ones if you die, giving them some financial support should the worst happen.

A joint life insurance policy covers two people at the same time and is designed for couples.

If one of you dies during the policy term, the other will receive a payout that can help with things like the mortgage and ongoing living costs.

Taking out joint cover is worth considering if you’re married or live with your partner, especially if you have children.

How does joint life insurance work?

Joint life insurance covers two people on the same policy until the policy expires or one person passes away. It’s also usually cheaper than taking out two single policies.

When you take out joint life insurance, you’ll only need to complete one application as a couple and pay one regular monthly premium.

There are two main types of joint life insurance you can choose from.

First-death policies

This is the most common type of joint cover. A first-death policy will provide the agreed lump sum if the first partner dies during the policy term, so it will only pay out once.

Once this happens, the policy will automatically end. The surviving partner will need to take out a new policy if they still want to be insured.

If both of you die at the same time during your joint term, the policy would still only pay one lump sum which will go to your beneficiaries.

Second-death policies

A second-death policy will only pay out after both policyholders have passed away - providing one single lump sum, which will go to your beneficiaries.

Normally used for joint whole of life policies, this cover tends to be used for inheritance tax purposes, rather than providing loved ones with financial support once you’ve gone.

We don’t compare second-death policies. But you can compare level term life insurance for two separate applicants. This effectively means having two policies with the same insurer. So if you both died during the term, both policies would pay out.

What types of joint cover are there?

There are several different types of joint cover to choose from and each one works in a different way. Which policy will suit you best will depend on your needs.

Term life insurance

This type of cover will protect you for a set period, known as the term. So, for example, if the term is 25 years, your policy will only pay out if you or your partner die during this timeframe.

The two main types of joint term cover are level term and decreasing term life insurance.

Level term policies will pay out a fixed lump sum if one of you dies during the policy term.

Decreasing term policies are designed to cover a repayment mortgage. The potential payout reduces over time in line with your mortgage until it reaches zero at the end of the term.

Whole of life

As the name suggests, a whole of life policy will cover you for the rest of your life provided you continue to pay the monthly premiums.

Unlike term insurance, you’re guaranteed a payout whenever your partner dies. Because a payout is certain, this type of cover is usually more expensive.

Family income benefit

This is an alternative to term life insurance. Instead of the life insurance payout being provided as one lump sum, it will be spread out into monthly or annual payments.

This tax-free money will be paid to your loved ones until the end of your policy term. So if you were to die ten years before your policy is due to end, they’d receive ten years of payments that can be used to replace your income during this time.

Critical illness

You can add critical illness cover to a joint life insurance policy to give you and your loved ones extra financial protection.

This will pay out if you’re diagnosed with a serious health condition that’s listed on your policy, this could include illnesses like cancer, a heart attack, or stroke.

Typically, you can only make a claim on a joint critical illness policy once. However, your joint life insurance cover won’t be affected and will carry on as normal.

What could joint life insurance cover?

Life insurance can help to provide your partner or your family with financial support after you’re gone, and the payout could help to cover:

  • Household bills and everyday expenses
  • Mortgage repayments
  • Childcare costs
  • Loan repayments
  • School or university fees
  • Funeral costs

Pros and cons of a joint life policy

Pros

Joint life insurance can be cheaper than taking out two single policies, but how much it costs will depend on your circumstances.

The policy will pay out regardless of which of you dies first and is available to unmarried couples. However, if you’re cohabiting you may want to write the policy in trust to help make it tax efficient.

If one of you passes away, joint life insurance can help the surviving partner to support the family and maintain the same lifestyle.

Cons

A joint policy will only pay out once and usually leaves the surviving partner without cover. You may still want cover of your own, for example to protect your children, but getting new life insurance when you’re older is likely to cost more.

You don’t get the same level of flexibility as single policies, where you can cover each person for a separate amount - taking into account their income and what they might need.

If you end up separating, it can be difficult to split a joint policy or you may need to cancel the cover and start from scratch with separate policies.

Frequently asked questions

Joint life insurance covers you as a couple, but it will only pay out once if either of you dies during the term. The policy will then end, leaving the remaining person without cover.

With joint life insurance, if your relationship breaks down it may not be possible to split the shared policy and you may both need to start your cover again separately.

With single life insurance policies, there’s the potential for two payouts if you both die during your policy term.

And if you’re covered separately and one of you dies, the remaining partner will stay covered until their own policy term ends.

You can tailor single policies so they can each provide a different payout amount, which can provide more comprehensive cover than a joint policy.

However, two single policies usually cost more than taking out joint cover, so it’s worth taking this into consideration.

This really depends on your personal situation.

For couples on a budget, joint life insurance can be a cheaper way to get cover and protect your family - although it’s still worth comparing this against the cost of two single policies.

On the other hand, if you can afford two separate policies, this can provide more flexibility and the potential for your loved ones to receive two payouts rather than one.

Plus, unlike a joint policy, if you were to separate or divorce, single policies won’t be affected - other than potentially having to change the beneficiary.

Taking out cover can provide peace of mind that your new family will be looked after financially if you were to pass away.

If a new baby is going to stretch your budget but you still want some cover, you may find that a joint policy is a cheaper option.

But this will only provide one payout, so it’s worth comparing the cost of two single policies as it may only be slightly more expensive.

Life insurance policies run for an agreed length of time, so when you’re choosing your policy term you’ll need to think about what you want it to cover.

For example, you may want it to last until your children reach adulthood.

A typical policy length is around 20 to 25 years, but you can choose this to be longer or shorter.

The term you can get will also depend on your age when you apply for cover. And most insurers state that the policy must end before you reach 90 years old.

Otherwise, your joint life insurance policy will last until the term ends or there’s a payout.

Depending on your policy, it can be tricky to split joint cover if your relationship breaks down.

Some policies have a separation option, which allows one of you to take over the policy if you’re no longer together.

If you don’t have this option, you’ll need to cancel your joint policy and each take out cover separately, which could be more expensive.

For this reason, when you’re taking out life insurance as a couple it can make things simpler if you both take out single policies. These will continue as normal if you split up, although you’ll probably want to change your beneficiary if it’s in your ex-partner’s name.

Yes, critical illness cover can be added to a joint policy or to a pair of single policies, but it will increase your premium.

This type of cover will pay out if one of you gets diagnosed with a serious illness. The payout can help to cover the mortgage or alterations to the home that you might need to make to accommodate your health needs.

You can put a life insurance policy into trust if you want to make sure your beneficiaries are provided for quickly and the full payout is tax-free after you die.

When you die during your life insurance policy term, the payout your policy provides will form part of your estate.

When your joint policy is put into trust, the payout goes to a third-party who will distribute the money. This means it won’t be included in the probate process or be subject to inheritance tax.

Before we can provide you with a life insurance quote, we’ll need to know a bit about you:

  1. Your details - information including your name, age and where you live
  2. Your cover - the type of policy, how much cover you want and how long for
  3. Your lifestyle - information about your lifestyle and any habits
  4. Your health - we’ll ask some questions about your physical and mental health

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