‘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 20191 suggests it’s a phrase that many of us would agree with.
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 – if that person were to pass away 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.
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 and 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, at which point the policy will end for the other partner. 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.
For this reason, you might choose to purchase two single life insurance plans, even though you are in a couple. This way, you both have separate cover, and potentially two policy payouts if you and your partner both pass away.
A further argument of choosing two single life insurance policies is that you can make sure each person's insurance needs are perfectly met. In other words, you can choose the right cover level for each of you individually, based on your specific needs, rather than settling on one amount to cover the two of you. Ultimately, buying two single life insurance plans offers you additional flexibility that joint life insurance can’t.
Both joint and single life insurance policies are there to offer help and support, ensuring the safety of your family’s financial future. The answer to whether a joint life insurance plan is for you really depends on whether it is a good match for your family’s individual circumstances, insurance needs and budget.
To help you think this through and weigh up your options, you can call our insurance specialists on 01392 241 850.
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 how much insurance you would need to support your loved ones and your lifestyle, should you or your partner sadly pass away.
Here are some of the costs to consider:
Mortgage or rent payments
Any outstanding loans
Income replacement (however, you might consider taking out income protection insurance for this purpose!)
Critical illness cover - some policies include both life and critical illness cover, though both can be taken out individually
For help understanding how much insurance you should buy for your family, give one of our insurance specialists a call on 01392 241 850. They will be able to give you all the information you need and support you in making the best decision.
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.