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What Is Joint Life Insurance Policy

What Is Joint Life Insurance Policy

Joint life insurance protects two lives under the same policy and usually only pays out on the first death (i.e. when the first policy holder dies).

Joint cover is particularly common when protecting a mortgage where both partners provide income to help pay for it. This means that should either partner die the mortgage can be paid off in full, reducing the financial pressure on the surviving partner. Joint life insurance can be taken out on level term, decreasing term and whole of life policies.

The main features of a joint life insurance policy are:

  • It covers two lives under one policy
  • It only pays out once, either on the first death or last death
  • It can be cheaper than buying two single policies

Joint vs single policies

A common dilemma is whether to buy joint life insurance, or two separate policies. Below we compare some common features of joint and single life insurance to help you decide.

Joint policyTwo single policies
Pays out once.Pays out twice (once for each partner).
Covers two lives but usually pays out on the first death only.Each policy will protect one life only and will be treated as entirely separate.
When one partner dies, unless the surviving partner has an additional policy, they will be left without cover in place.When one partner dies, the surviving partner’s policy won’t be affected.
Joint life cover can be cheaper than buying two single policies.Buying two single policies can be more expensive, but doesn’t equate to double the cost of a joint policy.
Should either partner suffer from pre-existing medical conditions or have a family history of ill health, premiums could increase significantly or insurance could be declined altogether.Each partner’s medical history will be judged separately. If one partner is too ill, the other partner can still be covered.
Joint decreasing term cover can be the cheapest option to protect a repayment mortgage. Joint level term cover will be more expensive than decreasing term but the cover amount remains the same throughout the entire term.There’s little advantage to buying two single decreasing term policies. Whilst the mortgage could be paid off should either partner die, the surviving partner would be left paying for a policy that decreases in value. If partners wish to be covered separately, level term cover may be more suitable.
  • Joint policy:
    • Pays out once.
    • overs two lives but usually pays out on the first death only.
    • When one partner dies, unless the surviving partner has an additional policy, they will be left without cover in place.
    • Joint life cover can be cheaper than buying two single policies.
    • Should either partner suffer from pre-existing medical conditions or have a family history of ill health, premiums could increase significantly or insurance could be declined altogether.
    • Joint decreasing term cover can be the cheapest option to protect a repayment mortgage.
    • Joint level term cover will be more expensive than decreasing term but the cover amount remains the same throughout the entire term.
  • Two single policy
    • Pays out twice (once for each partner).
    • Each policy will protect one life only and will be treated as entirely separate.
    • When one partner dies, the surviving partner’s policy won’t be affected.
    • Buying two single policies can be more expensive, but doesn’t equate to double the cost of a joint policy.
    • Each partner’s medical history will be judged separately. If one partner is too ill, the other partner can still be covered.
    • There’s little advantage to buying two single decreasing term policies.
    • Whilst the mortgage could be paid off should either partner die, the surviving partner would be left paying for a policy that decreases in value.
    • If partners wish to be covered separately, level term cover may be more suitable.

Advantages of joint life insurance

The only advantage to buying joint life insurance is that it can be slightly cheaper than buying two separate policies.

It’s often worth comparing quotes for both joint and single life insurance as separate policies could provide considerably more cover for only a marginal increase in price.

What happens if we get divorced or the relationship ends?

In the case of a divorce or a relationship ending some insurers may allow you to split a joint life insurance policy. Other insurers may require that you cancel your joint policy entirely with the option to set up separate cover.

If the main purpose of the insurance is to protect your children, you may simply wish to keep your policy running.

Joint terminal illness cover

Terminal illness cover is included with all single and joint term life insurance policies. It’s designed to pay out the full sum assured should the policy holder be diagnosed with an illness resulting in a prognosis of 12 months or less to live by a GP.

With joint life insurance, the terminal illness benefit will cover both policy holders, but will only pay out in the first instance of diagnosis (as per the above).

Some insurers won’t pay out for terminal illness in the last 12 months of the policy term.