Getting married is truly a joyous milestone in life. Yet sadly many marriages later break down, resulting in divorce. Whether you’ve just tied the knot or planning for the big day ahead, it’s never too early to purchase life insurance. Joint life insurance is a popular choice of cover amongst couples, but what happens to your policy if you get divorced?

Naturally, we don’t assume it but there’s always the possibility that you and your partner could get divorced. According to the Office Of National Statistics “There were 107,599 opposite-sex divorces in 2019, an increase of 18.4% from 90,871 in 2018.”

With that in mind, it’s better to be informed about how your joint life insurance policy could be affected in the event of a divorce. But first, let’s recap; what is joint life insurance and how does it work?

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What is joint life insurance?

Joint life insurance is a type of life insurance policy that covers two people under a single policy. If one of you dies, your insurer pays out a lump sum to the surviving policyholder (if the policy is taken out on a ‘joint life first death’ basis).

Many couples opt for joint life cover as it can work out cheaper than two single life insurance policies. It can also be an easier policy to manage as you only pay one lot of premiums to your insurer. If for any reason you stop paying your premiums you will no longer be covered.

The types of people who are best suited for joint life insurance include:

  • Married couples

  • Long-term partners

  • Business partners

  • Anyone who shares financial responsibility for a household

Joint life insurance policies generally work in two forms - first death and second death.

  • First death pays out after the first person within the couple dies, in which the policy then ends. The surviving policyholder would then need to take out further cover if required.

  • Second death pays out once both policyholders have died.

What happens to a joint life insurance policy after a divorce?

Unfortunately, if a couple gets divorced or separates, a joint policy cannot be divided into two separate policies. Usually in this situation, there are only two options:

  • Cancel the policy: If you decide to cancel the policy you won’t receive any compensation on the premiums previously paid. Both parties will then need to take out individual cover if required.

    However, with most whole life insurance policies, there is usually a surrender value when cancelling it. While not all of your premiums will be returned, you will still receive some money.

  • Transfer the policy: Some providers will allow you or your ex-spouse to take over the policy as a whole. This is a mutual decision between you both, signed over through legal documentation. The sole policyholder will then be directly responsible for paying premiums for the policy.

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Types of joint life insurance cover

When buying life insurance as a couple, it’s important to understand the different types available. There are two main types of joint life insurance cover - whole life insurance & term life insurance.

Whole life insurance (also known as life assurance) covers you for the rest of your life. It’s usually the most expensive type of cover., However, your family is guaranteed a payout no matter when you die (so long as you keep up your premium payments!).

With term life insurance you are covered for a set period of time, rather than for the rest of your life. Your policy will only payout if you die during the period of time you are covered for (i.e. during your policy term). Term life insurance is usually cheaper than whole life insurance, however, your loved ones are not guaranteed a pay-out.

Term life insurance has 3 levels of cover - level term, increasing term & decreasing term:

  • Level cover - the policy pay-out remains the same and premiums are fixed throughout the policy (guaranteed premiums).

  • Decreasing cover -  the pay-out decreases over time as you pay back the amount owed.

  • Increasing cover - the payout increases over the policy term in order to help offset the effects of inflation - though bear in mind your premiums will increase too to account for the increase in sum assured.

How much cover do I need?

Ultimately the amount of cover you need depends on the financial circumstances of you and your family.

A pay-out from a joint life insurance policy can support your family with:

  • Everyday living costs

  • Household bills

  • Rent or mortgage repayments

  • Childcare costs

  • Funeral expenses

Get a life insurance quote today!

At Cavendish Online we understand the importance of protecting the people we love most. That’s why we provide our customers with a whole range of options, making sure you get the best cover available.

You can apply online and get a quote in minutes through our easy-to-use form. Alternatively, you can choose to speak with one of our helpful specialists over the phone today!

Call the team now on:

03456 442 540

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