Single vs joint life insurance

Should I get single or joint life insurance?

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We take you through the pros and cons of single and joint life insurance.

Single or joint life insurance?

Life insurance is a good way of making sure your loved ones will have financial security if you pass away. However if you’re in a couple and you both want to take out a life insurance policy, you may be wondering whether to get a single policy each or a joint policy to cover both of you.

A single life insurance policy will only cover one person, and when that person passes away the policy will pay out the amount that the policy holder had chosen. However with joint life insurance, the cover will apply to two people – and the eventual pay-out will work slightly differently.

More people tend to opt for single level life insurance at 59.28%, while joint life insurance is slightly less popular at 40.72%.

Popularity of single and joint life insurance policies

Data collected by MoneySuperMarket, accurate as of September 2018.

Types of life insurance

Before deciding whether you need single or joint life insurance policies, you also need to choose from:

Decreasing term or level term

When you take out life insurance, it will generally cover a term – this basically means a set period of time. As a result the policy will only pay out if you pass away within the term you’ve taken it out for.

You’ll be able to choose between decreasing term and level term cover. With decreasing cover, your potential pay-out reduces over the length of the policy, while with level term it remains the same. Decreasing cover is often taken out to help pay off a mortgage, therefore it decreases along with the outstanding mortgage balance.

Life or life and critical illness cover

If you add critical illness cover to your life insurance policy, this means you’ll get a pay-out if you’re diagnosed with a serious illness. This can include cancer, strokes, heart attacks, or becoming incapacitated after an accident – how comprehensive your policy will be, depends on the provider.

Whole of life cover

Whole of life cover means your life insurance policy will last until you pass away. This is sometimes called whole of life assurance – this is because the term ‘insurance’ is for a risk that might happen, while ‘assurance’ is for a risk that certainly will happen.

Not all providers offer whole of life cover, whether as standard or as an optional extra. Therefore if this is something you might want, it could be worth searching around for the right policy.

The most popular type of life insurance policy is with critical illness cover as an add-on

Data collected by MoneySuperMarket from January to September 2018, accurate as of September 2018.

Single vs joint life insurance – the key information

If you’re thinking about taking out life insurance as a couple, here’s what you should consider before deciding between single and joint cover:

Cost

The cost of life insurance will depend on a number of factors, including:

  • Your age
  • Your health
  • Your occupation
  • Your lifestyle habits

While two single policies can sometimes be more expensive than combined cover for the both of you, this isn’t always the case.

The average price of a joint level term life insurance premium (without critical illness cover) would be £10.88 for two people under 29, while the same policy would cost £33.72 for two people aged 40 to 49.

However single level term life insurance costs an average of £6.15 for under 29s and £18.84 for people aged 40-49 – meaning it would cost an average of £12.30 to cover two under 29s with separate policies.

Age group

Monthly cost of single life insurance

Monthly cost of joint life insurance

18-29

£6.15

£10.88

30-39

£9.64

£17.56

40-49

£18.84

£33.72

50-59

£37.98

£63.07

60+

£138.25

£215.13

These figures are for level and decreasing policies based on a single life insurance policy, with life cover for a term between 20 and 30 years, for an amount between £150,000 and £200,000 – data collected by MoneySuperMarket, accurate as of November 2018.

If you’re aged 50 – 80 years-old, a specialist over 50s life insurance provider can offer a more affordable life insurance option than a standard life insurance policy.

Level of cover

If one of you or your partner is the main earner, you might each also want to look for different levels of cover. This is because the death of the highest earner would be more likely to impact your family’s financial situation – therefore you may want to take out a higher amount of cover for this earner.

Taking out individual life insurance policies would let you do this. As a result, the lower earner can insure themselves for a lower amount – they won’t have to pay the same higher premiums that the higher earner would.

This could also be a benefit if you or your partner has a pre-existing life insurance policy – some workplaces offer a ‘death-in-service’ pay-out for their employees. This would mean one of you would already be at least partially covered, while the other can take out a single policy to cover themselves.

The pay-out

If you and your partner each take out a single life insurance policy, your beneficiaries will get two pay-outs – one for each of you upon your death. However a joint policy would only pay out once, and when they pay out would depend on the policy you choose:

  • First death: a first death policy would pay out after the first policy-holder passes away. The second policy-holder would no longer be covered by the policy, and they may find it harder to take out new cover due to the increased premiums as a result of getting older
  • Second death: a second death policy only pays out once both policy-holders have died. Second death policies are usually only available for ‘whole-of-life’ insurance policies, which can be pricier as there is a guaranteed pay-out when both partners have died

If you take out a joint policy and both of you pass away at the same time, the pay-out would then be part of your estate. However, you will also have the option of writing your policy ‘in trust’ – this would mean the money goes into a tax-free trust fund, which is then passed on to a named beneficiary.

Your relationship

Another point to consider with joint life insurance is what would happen to the policy if your relationship broke down. Some insurers may allow you to split your joint policy into two separate ones – though this will probably mean a higher premium for each of you.

If this isn’t an option, then it’s likely you’ll have to let go of the policy – and any money you’ve already paid into it.

Critical illness claims

A joint life insurance policy can still include critical illness cover, however you’ll only be able to claim on this part of the policy once. You’ll still be covered by the joint life insurance policy after making a critical illness claim, but the critical illness cover won’t apply afterwards.

Age group

Monthly cost of single life insurance with critical illness cover

Monthly cost of joint life insurance with critical illness cover

18-29

£13.74

£25.73

30-39

£24.64

£45.52

40-49

£51.60

£95.09

50-59

£101.81

£171.86

60+

£334.16

£531.03

The average costs above were based on MoneySuperMarket customers looking for level term single and joint life insurance with critical illness cover included as an additional or a combined policy, with a total cover amount between £150,000 and £200,000 for 10 – 20 years, from January to December 2018.

Writing your policy in trust

Having your payment go into trust means it can be paid to your beneficiaries faster than if it is left as part of your estate. If your life insurance premium is added to your estate it might also add to the inheritance tax bill, whereas there would be no such tax if left in trust.

Compare life insurance quotes

Finding a better deal for life insurance is easier when you compare quotes on MoneySuperMarket. All you need to do is give us a few details about yourself, including your general health, occupation, and lifestyle, and we’ll give you a list of quotes tailored to your needs.

Then you can browse through the list and compare deals by their cost, level of cover, and any available add-ons or extras. Once you’ve found the deal you want, just click through to the provider to finalise your purchase.

However as with any insurance you shouldn’t automatically go for the cheapest option. It’s better to look for a balance between cost and coverage, so you don’t end up over-insuring yourself with cover you don’t need, or under-insuring yourself and leaving yourself unable to claim.

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