What is joint life insurance?
Joint life insurance is a policy that covers two people, while single life insurance only covers one person. Single life insurance is the more popular option, chosen for 58.4% of policies, whereas joint life insurance accounts for 41.6%*.
While single life insurance policies might be more commonly chosen, joint life insurance can often work out cheaper - so if it’s an option for you, it may be worth considering.
Joint life insurance could be suitable for a married couple, a long-term unmarried couple or perhaps even business partners. In most cases, once one of the two people passes away, the whole policy comes to an end, and the final pay-out is made.
*MoneySuperMarket data, showing the split between single and joint life insurance quotes between January and March 2018. Correct as of April 2018.
How does joint life insurance work?
Broadly speaking, there are two types of joint life insurance policy:
- ‘First death’ policy – A life insurance pay-out is made after the first death that occurs. A second payment will not be made upon the second death, so the survivor will no longer have life insurance cover.
- ‘Second death’ policy – A life insurance payment is made only after both members of the couple have passed away.
MoneySuperMarket data for January to April 2018, showing the average cost of life insurance premiums without critical illness cover by age group. Correct as of April 2018.
How much does joint life insurance cost?
Premiums vary greatly, and life insurance for the over 50s tends to be the most expensive. As you might expect, the sooner you take out a policy, the cheaper it is. Under 25s pay the least, on average, at £9.62 for joint life insurance without critical illness cover – but if you wait until middle age (46-65) to take out a policy, the average cost is £58.42.
You can choose to include critical illness cover with a joint life insurance policy, but this is still cheapest if you take out cover when you’re younger. For under 25s, the average cost of life insurance with critical illness cover is £21.86, but that jumps to £58.42 for people aged 46 to 65.
MoneySuperMarket data for January to April 2018, showing the average cost of life insurance premiums, with critical illness cover included, by age group. Correct as of April 2018.
Advantages of taking out a joint life insurance policy
- Cheaper premiums: In most cases, opting for joint cover is cheaper than taking out two individual life insurance policies.
- A pay-out is due irrespective of who dies first: A pay-out becomes payable after the death of the first policyholder, even if they are not the main breadwinner (‘first death’ policy).
- Available to unmarried couples: Joint life insurance can also be taken out between business partners, for example.
Disadvantages of joint life insurance
- If a relationship ends, cover cannot be split: If a couple with a joint policy split up, the insurer cannot divide the cover.
- If circumstances change: If one partner decides they don’t want to pay their share of the premium or can no longer afford to, and the other policyholder is unwilling to cover both, the policy would cease for both parties.
- One pay-out if both policyholders pass away at the same time: If both people die at the same time and have a joint policy, there will still be just the one final pay out.
Could I take out a single policy later?
If your other half passes away and your joint policy has paid out on a ‘first death’ basis, you might consider taking out a single life insurance policy for the remainder of your years.
However, factors such as your age and health status could mean you’ll end up needing high risk life insurance. If you’re considerably older, or present a greater health risk, than when you took out your joint life insurance cover, you’d fall into this category and it’s likely to cost you much more.
For example, if you bought decreasing term life insurance with critical illness cover, the average cost would be £57.48 for people aged 36 to 45. When you hit the 46 to 65 age bracket, the average price jumps to £124.49 – and if you’re over 66, the average cost is £531.85.
Removing critical illness insurance would make this much cheaper, but the reduced premium would come with a reduced level of cover that you may need. Without critical illness cover, the average price of decreasing life insurance for people aged 46 to 65 is £25.77 and for the over 66s it comes in at £116.64.
MoneySuperMarket data from January to April 2018, showing the average premium price for decreasing term life insurance with and without critical illness cover. Correct as of April 2018.
Joint life insurance and tax
Once a pay-out is due on a life insurance policy, there could be potential inheritance tax implications. An option to help sidestep a potentially large inheritance bill would be to set up your life insurance ‘in trust’.
Once a pay-out is due on a life insurance policy, there could be potential inheritance tax implications. One option to help sidestep a potentially large inheritance bill would be to set up your life insurance ‘in trust’.
A trust is a legal agreement which names the beneficiaries of your life insurance pay-out and isn’t included as part of your estate (which is subject to inheritance tax should you meet a certain taxable threshold). You can read more about life insurance and trusts with our dedicated guide.
Compare joint life insurance
There’s a lot to consider when it comes to taking out a life insurance policy - but whatever you decide, you should always compare joint life insurance premiums to make sure you get the best deal.
With MoneySuperMarket’s free online comparison tool, you just answer a few simple questions about your age, your current health and your circumstances and you’ll be able to compare a variety of policies at different levels of price and cover.
When you’re ready to compare joint life insurance quotes, you can choose the policy and provider that suits you (and perhaps your partner) the best, and be safe in the knowledge that you are fully covered.
See more tips for cutting the cost of life insurance.