Should I get joint life insurance cover or 2 single policies?
Life insurance is a great way to provide peace of mind that your dependents will be financially cared for in the event of your death. But if you are in a long-term relationship or marriage, is it best you take out a joint policy or two singles?
When so much is done together as a couple, from joint bank accounts to joint mortgages, it might seem logical to take out a joint insurance policy too. However, this is not necessarily the best option, so it’s important to understand the pros and cons of joint and separate life insurance.
What’s the difference?
- A joint life insurance policy will cover both of you under the same terms and under one single premium
- You’ll have one set of paperwork, one insurance provider and only one number to call if you want to make a claim
- On a separate insurance policy, the two of you are covered independently, (thus two separate pay outs)
- This gives you the freedom to pick the insurer who best meets your specific needs
- The cost of taking out separate policies can be slightly higher than a joint policy, but it’s usually not a significant amount.
Issues to be aware of with a joint policy
Despite the relative simplicity of insuring yourself and your spouse on a joint policy together, there are some serious drawbacks that you should make yourself aware of:
Only pays out once
- A joint policy will only pay out once, upon the first death
- If you both pass away, only one lump sum will be paid to your dependents
- If you and your spouse were to die in a car crash together, despite paying into an expensive joint life insurance policy, your beneficiaries will only receive one lump sum payment
- If you were insured separately, your dependents would have received two pay outs.
The policy cannot be divided
- If the relationship breaks down, the policy cannot be divided
- If you and your partner decide to split up, either one person will need to carry on paying into the policy ongoing, which will be significantly more than a single policy, or the policy will come to an end
- There could also be issues with who is entitled to the pay out from a joint policy, particularly if one of the partners remarries and has children with a new spouse.
Could force one partner to pay over the odds in future
- Because a joint policy only pays out once, it would come to an end after one party in the couple passes away
- This would leave the remaining person uninsured, and be seeking a new, individual policy at a later stage in their lives, forcing them to pay high premiums
- Having separate insurance policies can mitigate these issues, ensuring that both parties are adequately covered for the duration of their policy
- It also gives more freedom to find the right policy for each individual person and means your dependents won’t lose out in the event of a double loss.
Talk to our Reassured consultants on 0808 168 2025 to discuss your options for both joint or individual life insurance cover. Alternatively Start Your Quote online today.