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 69% of policies, whereas joint life insurance accounts for 31% of policies sold.
But joint life insurance can work out cheaper than two separate single policies, so if it’s an option for you, it may be worth considering. Across all life insurance policies sold on MoneySuperMarket between 2019 and April 2020, a single life insurance policy cost an average £13.04 per month, while a joint policy cost £19.84*.
Joint life insurance could be suitable for a married couple, a long-term relationship 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.
*The percentage of life insurance policies sold on MoneySuperMarket between May 2019 and April 2020.
How does joint life insurance work?
A joint life insurance policy offers cover for both you and your partner in case anything were to happen to either of you during the policy term.
You’ll both be covered by one policy, and you’ll decide how much of a pay-out you’d need to cover both of your financial commitments if one of you were to pass away. This would typically be enough to cover your mortgage repayments and the needs of your family.
You’ll then take out a cover amount (the ‘sum insured’), and this would be the amount the insurer would pay if either of you passed away. You can choose whether the sum insured stays the same no matter when you claim– level term life insurance – or whether it decreases as you pay off your mortgage – decreasing term life insurance.
A joint life insurance policy will only pay out once, but when will depend on the type of 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
It is more common for an insurer to offer a first death policy. A first death pay-out on a joint life insurance policy can help to make the process quicker and easier for the surviving partner.
If you opt for a policy that pays out when the first partner passes away then the second partner can decide to then take out a single life insurance policy – but their payments will most likely be more expensive at this point, as life insurance premiums typically increase with age.
If you were both to pass away at the same time during the policy term, then the money would become part of your estate unless you’ve written the policy ‘in trust’ and named another beneficiary.
A ‘second death’ policy will typically only be an option when you take out a whole of life insurance policy. Whole of life insurance policies tend to be more expensive because it is guaranteed that the insurer will need to pay out whenever the second partner passes.
You will pay one monthly payment between the two of you for your insurance.
What does joint life insurance cover?
Joint life insurance pays out a set amount of money to the surviving partner if one of you passes away during the policy term. A joint life insurance policy pay-out could help cover:
- Mortgage repayments
- Household bills and day-to-day expenses
- Any current or future schooling fees
- Any money you’ve borrowed that you still need to pay back, for example, credit cards, car loans or hire purchase agreements
- Any extra money that would help your family if one of you couldn’t be there
The average amount of cover taken out by customers who bought a joint life insurance policy on MoneySuperMarket between May 2019 and April 2020. This includes where critical illness cover has been added to a policy
How much does joint life insurance cost?
Life insurance premiums vary greatly. As you might expect, the younger you are when you take out a policy, the cheaper it is. Under 25s pay the least, on average, at £11.00 a month for joint life insurance without critical illness cover – but if you wait until you’re between 45 and 54 to take out a policy, the average cost is £34.14.
Age group | Monthly cost of joint life insurance with critical illness cover | Monthly cost of single life insurance with critical illness cover |
|---|---|---|
18-29 | £25.73 | £13.74 |
30-39 | £45.52 | £24.64 |
40-49 | £95.09 | £51.60 |
50-59 | £171.86 | £101.81 |
60+ | £531.03 | £334.16 |
The average costs above were based joint life insurance policies sold to MoneySuperMarket customers with or without critical illness cover included as an additional or a combined policy, with a total cover amount between £100,000 and £200,000 across all term lengths.
Should critical illness cover be added to joint life insurance?
You can choose to add critical illness cover to your standard joint life insurance policy. Critical illness can only be claimed once on a joint life insurance policy – so only one person will be able to claim for critical illness if they need to.
The joint life insurance policy will continue if a claim has been made for critical illness, but there will no longer be critical illness cover.
Critical illness cover is also cheapest if you take out cover when you’re younger. For under 25s, the average monthly cost of joint life insurance with critical illness cover is £29.92, but this increases to £69.50 for people aged 45 to 54.
What are the types of critical illness cover?
Most insurers offer the option of taking out critical illness cover either in addition to or combined with your life insurance policy:
- Additional cover: Life insurance with additional critical illness cover can pay out more than once, if you get a critical illness and if you pass away (both during the term of your policy)
- Combined cover: Combined policies only pay out once, either if you become critically ill or if you pass away (both during the term of your policy).
- What are the advantages of 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 is made 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.
- What are the 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.
- Single versus joint life insurance?
While joint life insurance has many advantages, some examples of when two separate single policies can work better than a joint life policy include when one person in the couple:
- Has a pre-existing medical condition or a family history of critical illness
- Has a high risk job or hobbies
- Smokes
- Earns more and the amount they’d need to cover their financial contribution would then be more.
These examples can increase the cost of a life insurance policy, which may make the monthly premium for your joint life insurance unaffordable between you. If this happens then out two single life insurance policies that reflect your individual cover needs can make sense and be more affordable for you both.
Age Group | Monthly cost of single life insurance without critical illness cover | Monthly cost of joint life insurance without critical illness cover |
|---|---|---|
<25 | £5.89 | £11.00 |
25-34 | £9.04 | £14.39 |
35-44 | £13.35 | £22.29 |
45-54 | £21.21 | £34.14 |
55-64 | £33.89 | £53.96 |
The average costs above were based joint life insurance policies sold to MoneySuperMarket customers with or without critical illness cover included as an additional or a combined policy, with a total cover amount between £100,000 and £200,000 across all term lengths.
Could I take out a single policy later?
If your partner 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.
If you’re considerably older or present a greater health risk than when you took out your joint life insurance cover, you will possibly fall into a high risk category and your life insurance will typically cost more.
Removing critical illness cover would make this much cheaper, but the reduced premium would come with a reduced level of cover than you may need.
Can a joint life insurance policy be put in trust?
If your joint life insurance policy pay-out will be made on a ‘first death basis’ then the money will automatically be paid to the surviving partner. But you can put a ‘first death basis’ joint life insurance policy in trust to name another beneficiary if both of you were to pass away at the same time.
This means the money won’t be added to your estate and subjected to inheritance tax, so your beneficiary will likely receive the money quicker.
A whole of life joint life insurance policy that pays out on a ‘second death basis’ can also be written in trust. The pay-out will often be made to a beneficiary to help cover the cost of any inheritance tax bills on your estate.
What happens to your joint life insurance policy if you separate?
If you take out a joint life insurance policy with a partner and you separate during the policy term, then while the cover can’t be divided under the joint policy, you might be able to split the policy into two separate ones. Whether or not you can divide the policy will depend on the insurer.
If you can separate the policy, then there will most likely be certain terms and conditions around this. For example, your insurer may say you need to let them know you wish to separate the policy within 6 months of the separation happening.
Be prepared for your monthly insurance premiums to be higher and updates to your health, lifestyle, cover amount and age will most likely also increase the premium.
How can I buy joint life insurance?
Comparing joint life insurance quotes can help you find the right policy for you and your partner. You can use MoneySuperMarket’s life insurance comparison tool to compare joint life insurance quotes.
Answer a few questions about you, your health and lifestyle and the amount of cover you need. You’ll need to make sure your responses are accurate and honest to make sure your dependants receive a pay-out if you pass away.
You’ll also be able to add a second applicant to your policy to make it a joint life insurance policy. Some prices will be guaranteed and fully underwritten which means you can buy immediately. With some you’ll need to confirm certain details with the insurer.
You can change the cover amount, cover length and cover type to see how this affects the monthly price you pay. If you want to add critical illness cover to see how this affects the cost of life insurance then you can do this by selecting ‘Add critical illness cover’.
*Data from life insurance policies sold on MoneySuperMarket between May 2019 and April 2020, with no critical illness cover added, across all term lengths with cover worth between £100,000 and £200,000.