Should you get joint life cover?

If you’re taking out life insurance with a partner, should you buy joint or single cover?

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People often think about life insurance for the first time when they move in with a partner or get married. 

And that makes sense because a life insurance policy pays out a lump sum or regular income when you die, so it can support your other half financially after your death. 

But should you buy one joint life policy or take out two separate plans? 

Choosing the right policy for you

Joint life policies are popular, primarily because they are convenient. But it’s worth making sure you understand the limitations of a joint life plan before you sign up. 

The biggest downside of joint life insurance is that it pays out only on the first death. 

That means there is no payout when the second policyholder dies, which could leave any dependants struggling to cope financially. 

Single policies, on the other hand, cover each policyholder separately, so there would be a payout when each person dies.

If you opt for a joint policy, the survivor could choose to arrange their own cover after the first death, but the problem with this is that the cost is likely to be higher to reflect their greater age – and possibly poorer health.   

You also have to consider how your dependants would cope with one payout if you were both to die at the same time. 

If the life insurance is in place simply to pay off the mortgage, then a joint life plan can work well. But if you want to leave some money for your dependants, then it might be worth considering two separate policies. 

Flexibility

The other problem with joint life insurance is the lack of flexibility. 

Let’s say you earn a much bigger salary than your partner. A joint life insurance policy does not reflect any differences in income because it pays out the same amount whoever dies first. 

You could therefore end up buying too much or too little life cover for one or other of the lives. 

Similarly, if you’re younger than your spouse, you might want to take out life insurance for 25 years, but your spouse might want life insurance for only 15 years. Again, a joint life policy could not accommodate the age gap. 

What’s more, if a relationship breaks down, most insurers will not split a joint life policy into two separate plans, so you could be stuck with inappropriate cover, or end up forking out for a single life policy of your own.   

But if you have taken out two separate plans from the start, you have much more flexibility and can also arrange different types of policy. For example, one could include critical illness, but not the other. 

Be aware that if your policy does include critical illness cover (which pays out a lump sum on the diagnosis of one of a list of about 50 serious conditions) and you make a critical illness claim, your life insurance policy will usually end.

If you have a joint policy, that means there will be no payout on either the first or second death.

But with two single policies, only the person who had claimed for critical illness would see their policy end.

Compare the cost

Many people assume that two separate policies are more expensive than one single plan. But it’s not always the case. If one of you is older or suffers from ill health, it can often work out cheaper to buy separate cover. It all depends on your circumstances. 

You can compare quotes for both single and joint life insurance with MoneySuperMarket, so you know you are getting the best deal for you and your loved ones. 

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