Joint life insurance vs. Individual life insurance what is best for your family?

April 30, 2013 at 11:17 am 4 comments


796px-fruhling_bluhender_kirschenbaumIf you’re looking to take out life insurance, one of the big decisions to make is whether to apply on a joint or single basis.


A joint life insurance policy insures two lives on a single basis, while single life policies mean you have two separate life plans.


Term policies are the simplest and cheapest form of life insurance, and can be taken out on either a joint or single life basis. With a joint term life insurance policy, you pay a monthly premium for a set amount of cover for a fixed number of years – the term. The policy will then pay out a lump sum in the event of death.


Joint life insurance vs. Individual life insurance

Taking out a joint life insurance policy usually works out cheaper than taking out one policy each.

But there are benefits to taking out two single policies instead. While these will cost slightly more, two separate policies will provide double the cover and double the payout.

For example, if a husband and a wife had joint life insurance and were both to die in the same car crash, say, any children left behind would only benefit from one payout.

A joint policy can also prove problematic if the relationship breaks down, as few insurers will divide the policy into two.

Further, if one person decides they no longer want to pay their share of the premium, the policy may lapse.

Issues can also arise if a new partner and children come onto the scene after a split, as they may need to be taken into consideration in the event of death.


Types of joint life insurance

With most joint life insurance policies, payouts are usually on a “first death” basis.
This means the first person will receive a payout should the other die.

After this payout, the remaining individual may no longer be covered by the policy – so could find themselves uninsured.

However, some policies will work on a joint life “second death” basis where both deaths in the partnership are covered – and a pay-out made on the second death.

Generally speaking, premiums for joint life second death insurance policies should be lower than for a standard joint life first death policy, as the risk to the insurer is reduced.

An alternative to taking out a joint life second death policy is to purchase two single life insurance policies. Under this arrangement, a lump sum is paid on both the first and second death.


Who can I take out joint life insurance with?

Joint policies are available to married couples, registered civil partners, cohabiting couples who have joint financial obligations, such as a mortgage for instance.

For a business partner, for example, a joint policy could prove beneficial when starting up a new small business.

But while single life policies will cost you more, they could provide you with double the level of cover and will mean a pay-out on both the first and second death; you can also be insured for different amounts.

Irrespective of whether you decide to take out a single or joint life insurance policy, the key is to shop around online to compare quotes. It’s also important not to buy on price alone. You need to look at what the policy covers, and pay particular attention to exclusions, to ensure you are getting the best value for money – and the right type of coverage.

We shop around for you !





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