How does joint life insurance work?

With so many options and types of life insurance policy to choose from online, it’s never been easier to arrange and compare cover.

We all want to ensure that our family is provided for if the worst is to happen and we are no longer here. 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. 

If you are a couple, then it’s worth looking into a joint life insurance policy. We’ll delve into how it works and how it differs from a single policy, in this guide.

How does joint life insurance work?

Just like most types of life insurance, joint cover 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. 

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.

What is the difference between a single and a joint life insurance policy?

If you’ve already been looking at different options, you may have noticed that you could get a separate ‘single’ life insurance policy as an individual, or as a joint policy with your partner or spouse. To add to this, as a couple, you could also both take out an individual single policy, even though you’re a couple.

Single and Joint Life Insurance policies are similar, but with a few key differences:

A 'single' life life insurance policy covers one person and if the policyholder were to die during the term of the policy, their loved ones would receive a payout. If you and your partner were to decide to take out two separate policies, then a payout could then be claimed for each policy if both policyholders die within the term.

Whereas a 'joint' life insurance policy covers two people on a single policy. This means there’s only one monthly premium to pay. Some people find this simpler to manage and you’ll only need to complete one application, but you would have to answer questions for both policyholders.

When it comes to buying life insurance, the younger you are, the less expensive it generally is, so taking out a policy later in life inherently increases the price of a monthly premium.

TIP: It’s worth bearing in mind that in the event of separation or divorce, a ‘single’ life insurance policy still stands (as a separate policy) whereas joint life insurance might no longer be suitable.

Should I buy single or joint life policy?

If your children, partner or other family members depend on your income to cover their living expenses and the home they live in, you should definitely consider life insurance to help provide for your loved ones in the event of your death.

You can’t rely on the government to take care of your family – the money they would get from the state is probably much lower than you’d expect.

If you or your partner pass away the pay-out from the policy can be used for things such as:

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, joint cover 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 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, don’t 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.

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 cover, your insurer 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.

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.