Joint life insurance policy after divorce

Unfortunately, divorce and separations happen, but what impact will this have on your life insurance policy?

If you and your partner have both taken out single policies, the effects of a divorce will be minimal.

But with 40% of all policies being joint policies[1], what happens then? Will the cover remain in place or will you need to cancel your policy?

The options available to you will depend on the insurer, as some will include a ‘separation option’ within their policies, but this isn’t offered by all providers.

If you find yourself in a position where you need to secure a new policy, Reassured can help you to compare multiple policies from some of the UK's leading providers.

Keep reading to find out everything you need to know about joint life insurance after divorce…

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What happens to life insurance after a divorce?

Deciding what to do with your joint life insurance policy after a divorce is completely up to you and your ex-partner.

There are typically two main options available to those with a joint policy who’re going through a divorce:

  1. One party takes over the policy
  2. The policy is cancelled and both parties find new cover

Taking over the policy

You’ll need to come to a mutual agreement with your ex-spouse about who’ll take over the policy.

The policy will then be signed over to the chosen party through a legal document.

They’ll then take sole responsibility of the policy and will need to continue making monthly premium payments.

Please note, that not all providers will offer this option.

Cancelling the policy

Alternatively, if an agreement can’t be made, you have the option of cancelling the policy.

Once the policy has been cancelled, both parties will then be able to take out their own life cover.

New policies can accommodate any changes in your financial obligations as a result of the divorce.

However, you may experience higher premiums due to older age and needing to provide new medical information.

If you find yourself needing new cover, comparing quotes is essential to securing a policy that meets all of your needs at a price that’s within your new budget.

At Reassured we can compare quotes from some of the UK's leading insurers to find you the best deal.

Some insurers may also offer a ‘separation agreement’ but not all providers will include this option in their policies.

What is separation benefit?

A ‘separation benefit’ or ‘separation agreement’ is an option that is included with some joint life insurance policies.

It allows you to split the policy into two policies in the event of a divorce.

Please note, not all providers offer this benefit.

When using the separation benefit it’s likely you may need to fill in a form to be sent to your insurer.

In this form, you’ll need to include evidence of your separation.

To find out if your joint policy has this benefit, you can check the terms and conditions of your policy or contact your provider.

Is life insurance still valid after divorce?

Yes, a joint life insurance policy is still valid after a divorce.

Unless you choose to cancel the policy, your cover will remain in place until the end of the term.

You’re not legally obligated to inform your insurer of your divorce, however, it’s best to do so to find out what options are available to you regarding your policy.

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Mortgage life insurance after divorce

Often a joint life insurance policy is taken out by couples to protect a shared mortgage.

If one partner were to pass away, the remaining partner may struggle to continue making mortgage payments.

A life insurance policy is typically taken out to ensure the remaining partner can pay off the mortgage in full and remain in their home.

When going through a divorce you may decide to sell the house and you and your ex may find new places to live.

In this case, it’s likely you may want to cancel your life insurance policy and take out new cover to protect your new living situation.

Alternatively, you may come to an agreement for one of you to remain in the house.

In this case, you may choose to sign the policy over to the party who has taken over the mortgage.

If you’re looking for new life cover to protect your new home, Reassured can compare quotes on your behalf to ensure you secure the best deal.

Life insurance beneficiary after divorce

With a joint life insurance policy, it’s likely that each spouse would have named each other as a beneficiary as a way of protecting shared assets.

However, if you’re going through a divorce, it’s likely you’ll no longer want your ex-spouse as a named beneficiary.

If you’ve made the decision to cancel the policy, this won't be an issue as you can take out a new policy and name whoever you’d like to benefit from your life insurance pay out.

However, if you’ve taken over the joint life insurance policy, you’ll need to contact your provider.

They’ll be able to provide information about the process of changing your beneficiary.

If you’ve written your life insurance in trust, this may cause some complications.

If the policy was written in an absolute trust, it’s unlikely you’ll be able to change the beneficiary on the policy.

If the policy was written in flexible or discretionary trust, it’s likely you’ll be able to make the necessary changes to the policy.

Read our comprehensive and up to date article on life insurance beneficiary rules UK »

Can husband keep wife on life insurance after divorce?

Unless you choose to change the named beneficiary on the policy, your ex-spouse will remain as the named beneficiary.

This means they'll benefit from your pay out if you were to pass away while the policy is active.

Can an ex-spouse collect life insurance?

If you choose to keep your joint life insurance policy after a divorce and your ex is still listed as a named beneficiary, they’ll be able to make a claim on the policy after your passing, (if you pass away during the term).

This means they’ll receive the lump sum pay out from the policy.

It’s important to contact your provider when going through a divorce as they’ll be able to provide you with all your options regarding your joint policy.

This means you can cancel the policy or make any necessary changes to your named beneficiaries.

Is it better to get single or joint life insurance?

Which option is best for you will largely depend on your needs and your budget.

A joint life insurance policy is often taken out by couples to protect shared assets. This can include:

A pay out from a joint life insurance policy can help the surviving partner to cover these large expenses and relieve them of any financial stress.

Securing a joint life insurance policy can also help you to save money as you’ll only need to pay one premium to cover two lives.

However, as a result, there will only be one pay out. This is typically after the first death.

This means that if one partner were to pass away, the other partner would be left needing to find new cover at an older age.

Complications can arise if you divorce or separate from your partner, as detailed in this article.

Taking out two single policies may be more expensive but it can have its benefits.

Each partner will have their own policy, meaning there will be two pay outs upon the passing of each policyholder.

If you have dependants this can be extremely beneficial as two policies will provide enough funds to take care of any financial obligations.

The following data shows the average monthly cost of 2 single policies, compared to a joint life insurance policy[2].

Age Two single policies Join policy
Under 25 £11.78 £11
25-34 £18.08 £14.39
35-44 £26.70 £22.29
45-54 £42.42 £34.14
55-64 £67.78 £53.96


At Reassured our award-winning team can take you through all the options available and compare both single and joint policies on your behalf.

Cancelling a joint life insurance policy

If you decide that cancelling your joint life insurance policy is the best option, you can do so by contacting your provider.

Often you can cancel your policy for free, however, any premiums you’ve paid into the policy so far won’t be returned.

Some insurers may charge a cancellation fee, but this will vary between insurers.

Once you’ve cancelled your policy, you and your ex-spouse will need to secure new cover.

Setting up a new life insurance policy

Getting a divorce may bring about some big life changes.

These life changes may have an impact on your financial obligations and it’s likely the amount of cover you require after a divorce may be different to when you were married.

If you’re cancelling your joint policy and are looking to take out a new policy, it’s likely your provider will try and persuade you to take out a single policy with them.

However, this may not be the most cost-effective solution.

Comparing quotes from various providers is essential to securing the most suitable policy for the best price.

At Reassured we can compare quotes from some of the UK's leading providers on your behalf to secure you the best deal.

How much life insurance do you need?

Enter your financial commitments to understand the level of cover you require.

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£121,687 is the estimated average outstanding mortgage per household in the UK.

Our property is generally the largest financial commitment any of us will make.

Your life insurance should cover this significant debt should you no longer be around.
£
?

According to Money Advice Service, full-time childcare in the UK now costs £242 a week.

The loss of a parent could result in the need for additional childcare whilst the surviving parent increases their hours to account for lost income.

Your life insurance cover should factor in this additional required outgoing.
£
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The average level of debt (minus a mortgage) in the UK is £15,385.

Factoring in any outstanding debts in your name when arranging life insurance ensures this burden is not passed to loved ones.
£
?

You may wish to leave your loved ones an inheritance or lump sum gift upon your passing.

Factoring in the gift amount when arranging your cover will ensure the pay out amount will be sufficient to provide your loved ones with this selfless gesture.
£
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According to SunLife, the average cost of a UK funeral is now £4,417, whilst the total cost of dying is £9,493.

This is a 130% increase over the past 16 years and shows no signs of slowing down.

A significant cost which should be factored into the amount of life insurance you secure.
£
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If you are one of the 65% of the UK who are lucky enough to have savings, this could be used as protection if you were to pass away.

Any pay outs from existing life insurance policies and investments can also be used as financial protection for your loved ones if you were no longer around.

Factor this into your required cover amount.
£ -

Your total cover estimate

£ 0

Let us find your best quote.

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Is life insurance considered marital property?

No, a life insurance policy is not marital property.

In the event of a divorce, you and your ex-partner will need to come to a mutual decision about what to do with the policy otherwise it will simply stay in place until the end of the term.

Divorce statistics UK

  • In 2018 there were 90,871 divorces in opposite-sex couples.
  • The average duration of marriage among people who divorced was 12.5 years
  • With ‘unreasonable behaviour’ being the most common reason for divorce
  • In the same year, there were 428 same-sex marriage divorces[3]

Compare life insurance quotes after a divorce

We hope this article has provided you with some information about what you can do with a joint life insurance policy after a divorce.

If you find yourself in a position where you’re looking for new life cover, why not contact Reassured?

Our award-winning team can provide you with all the options that are available and compare quotes on your behalf.

Not only helping you to save time, but also helping you to save money.

Get in touch and secure a policy that meets all of your needs.

Whatsmore, life cover through Reassured starts at as little as 20p-a-day.

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Sources:

[1] https://www.moneyexpert.com/life-insurance/divorce/

[2] https://www.moneysupermarket.com/life-insurance/single-vs-joint/

[3] https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/divorce/bulletins/divorcesinenglandandwales/2018

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