‘It takes two’, a phrase we’ve all heard before, whether that’s because of the popular idiom, or because of Marvin Gaye’s cheesy anthem. The fact that around 60% of the population in England and Wales were living in a couple in 2019 suggests it’s a phrase that many of us would agree with.
If you are lucky enough to have found your true ‘partner in crime’, then it's understandably difficult to envision a future without them in it. Perhaps it is even more difficult to think about not being there for them, should you sadly pass away.
This guide will take you through what it means to have a joint life insurance plan, and help you decide on the right type of insurance for you and your partner.
What is a joint life insurance policy?
Life insurance is for anyone and everyone, and there are so many different options when it comes to finding the insurance cover that is right for you. One thing to consider is whether to buy a joint life insurance policy or an individual life insurance policy. Both are similar, in the sense that they provide financial protection for your loved ones, but there are also some key differences.
An individual life insurance plan, otherwise known as a single life policy, is taken out by one person (the policyholder) – if that policyholder dies during the term of the policy, their loved ones would receive a payout.
A joint life insurance policy covers two people within one plan. Between you, you would pay one monthly premium instead of paying separate premiums for separate life cover. Should one of the policyholders die during the policy term, the surviving policyholder would typically recieve the policy pay out (if the joint policy is on a 'first death' basis). They would then need to apply for a new life insurance policy, should they still require cover.
Joint or individual life insurance - which is better?
Some couples choose joint life insurance for budget reasons and because it is arguably simpler; you only complete one application and pay one set of premiums, generally making it cheaper than two single policies and often easier to manage.
However, it is worth bearing in mind that there are drawbacks to joint life insurance. Notably, the policy will only cover one partner’s death. So, if one person dies during the policy term, the policy will end for the surviving partner (if the policy is taken out on a 'joint life first death' basis). This can prove problematic in the future, as the remaining partner would be left without cover. The cost of taking out a new life insurance plan generally increases the older you are, so for the surviving partner, taking out a new policy at a later date will likely be more expensive.
To help you think this through and weigh up your options, call our insurance specialists today.
Do both spouses need life insurance?
The simple answer is, probably, yes.
If one of you earns more than the other, then it is logical to think that the main breadwinner has the biggest need for life insurance, as the financial impact of their absence, and loss of income, would certainly be felt.
However, even if you are not the main breadwinner, you should consider the extra costs that would arise if you were no longer around (these are likely to span beyond your current financial contributions to the family pot!). For example, if you are the main carer for your children, then your partner would need to fund alternative childcare, or take time off work to care for your children themself, which would have a big impact on the family finances.
How much insurance does my family need?
Whether you and your partner opt for a joint life insurance policy or two individual ones, it is important to think through your financial commitments and work out the level of cover you would need to support your loved ones and your lifestyle, should you or your partner sadly die.
Here are some of the costs to consider:
For help understanding how much insurance you should buy for your family, give one of our insurance specialists a call, they will be able to give you all the information you need and support you in making the best decision.
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What happens to my joint life policy if we divorce?
Untangling your lives and, particularly, your finances, after deciding to separate can be tricky.
With single life insurance plans, you will most likely only need to change the name of the person due to receive any policy payout, whereas splitting a joint life insurance policy is much more complicated. In most cases, separating joint life cover often cannot be done (though there are some exceptions to this). The most common resolution is to replace the existing insurance plan with a new single policy, or one partner can choose to take over the existing policy, which may be preferable if your health has changed since buying the joint policy initially.
If you do go through a divorce, then no matter what type of protection insurance cover you have, you should reassess whether it is sufficient for your new circumstances. You may be taking on more responsibility – for example, owning a home or looking after children - and more responsibility can mean more to protect, so you may need a new or updated policy.
For more information, check out our article 'What happens to joint life insurance after divorce?'
How can I buy joint life insurance?
At Cavendish Online, we offer many options to help you find the best insurance for you and your loved ones. You can quote and apply for an online policy yourself, in just a few minutes.
Alternatively, you can choose to speak with one of our specialists over the phone, who can guide you through the process and help you choose the best policy.
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