How does joint life insurance work?

Whether you are in a close relationship or planning to start a family, it's never too early or too late to apply for life insurance.

With so many types of life insurance, finding cover can be easy as pie, but that doesn't necessarily mean it's the right choice for you and your loved ones. If you are a couple it is worth looking into a joint life insurance policy. We all want to ensure that our family is provided for if the worst is to happen and we are no longer here.

Joint life insurance may sound similar to that of a standard or 'single' life insurance policy, however, there are a few differences that set them apart. In this article, we'll be looking closely at what joint life insurance is and how it works.

How does joint life insurance work?

Like most types of life insurance, jointcover pays out when the policyholder dies, but with some exceptions. Though a joint life insurance policy covers two people, it only pays out for one death. There are two main types of joint life insurance - First death and second death policies.

It is as simple as it sounds, a first death policy pays out on the first death of one of the policyholders. The pay-out can be used to support your partner or spouse with living costs. The policy automatically ends once a valid claim is made, so the surviving policyholder will need to seek further cover should they require it. 

With a second death policy; it will only pay out when both policyholders have passed away (within the policy term). The pay-out is then issued to your loved ones. 

The cost of joint life insurance

In most cases a joint policy could cost less than taking out single life insurance policies. The cost of most life insurance policies is determined by several factors such as:

• The policy type  (Term Insurance or Whole of Life) 
   

• The amount of cover you require (the sum assured) 
   

• The length of the policy (the policy term) 

Before taking out a joint life insurance policy, your insurance provider will ask you some questions regarding yourself & your partner's health and lifestyle. The cost of your premiums depend on:

• Your age 
   

• Your health 
   

• Your lifestyle (including your ‘smoker status’)

The older you become, the more you can expect to pay for life insurance. Your health is also important as those with pre-existing conditions may end up paying more or even being denied fully medically underwritten coverage. 

If you are a smoker it's best to quit before taking out life insurance as this can increase costs. Some providers will even reduce your premiums as an incentive for you to quit.

How can I buy joint life insurance?

At Cavendish Online, we provide many options in helping you get the best life insurance for you and your loved ones. You can apply for a policy yourself, in just minutes. Or for a more personal touch, you can choose to speak with one of our helpful specialists over the phone.

Types of joint life insurance cover

A joint policy can be purchased as one of three main types of cover:
 

• Term life insurance
   

• Whole life insurance
   

• Decreasing term cover (also known as mortgage life insurance)

Term life insurance provides coverage for a set period - or 'term length'. When taking out a policy you and your insurer agree to a set period (i.e 30 years). Your loved ones will only receive a pay-out providing you or your partner die within the policy term. However, if you survive the policy term then the policy ends and you won't receive a pay-out when you eventually die.

Term life insurance has three levels of cover - level term, decreasing term and increasing term. 

Whole life insurance- also known as 'whole of life insurance' covers you for the rest of your life - so long as you keep paying your monthly premiums. Unlike term life insurance, you are guaranteed a pay-out no matter when you or your partner dies. This is usually the more expensive form of coverage, however, you have peace of mind knowing that your loved ones will definitely receive a pay-out. 

Decreasing term cover - or mortgage life insurance works so that the policy pay-out reduces over a fixed period. This type of cover is usually taken out to cover a loan or debt, like a mortgage. It's designed so that if you or your partner were to die whilst the mortgage is outstanding, the pay-out can be used to pay the remaining amount.

Should I buy single or joint life policy?

Whether or not you buy a single or joint life cover is up to you and your individual circumstances. For instance, if you are a couple without children, a joint policy can be used to provide financial support to the surviving policyholder in the event of one of you passing away during the policy term.

If you are married with children, though a single policy can provide financial support for your family, it only covers one person. With a joint life insurance policy, you are both covered, so the surviving policyholder can use the pay-out to support your children.

However, if you are a single parent, it may make sense to choose an individual policy over a joint policy as the money will most likely be paid to your children regardless of the policy type.

If you are unsure about what policy is best for you and your current situation, do not worry - we can help! Cavendish Online has a team of friendly and professional advisers who can review your current situation and make recommendations for your cover. Please head to our speak to an adviser page for more information about this service.

What happens if I can't pay my premiums?

If you are unable to pay your premiums, there are usually a few options available.

For example, if you are struggling to pay your premiums because you’re currently off work ill, and your plan includes waiver of premium, your insurer will cover your premiums for you and you won’t lose the cover.

Alternatively, they may be able to grant you some sort of payment holiday or repayment plan.  

It’s important to speak to your insurer before making any decisions about your policy. They will be able to provide more information and advice on what options are available.