If both you and your partner are looking for life insurance, you have two options available to you. You can either take out a single life insurance policy each or take out a joint policy. Both options can have their advantages, so it is important to understand your options before taking out a policy.
If you are married or cohabiting, joint life insurance could provide feasible cover depending on what you want to protect.
It is worth noting that should you split up, the policy may not provide a separation benefit. Joint life insurance can be more suited to those who have already made a financial commitment together, such as buying a house.
Joint life insurance will cover both yourself and your partner, but it is important to remember that cover usually works on a ‘first event’ basis. This means the policy will only pay out once, usually after the first death or first diagnosis of a terminal illness within the policy term. Once the policy has paid out, the cover will end.
The idea behind this is that the pay-out will help the surviving partner to pay the mortgage or bills.
Both partners must be insured for the same amount with a joint life insurance policy. This enables the pay-out to remain the same no matter who passes away. If the worst was to happen and both partners passed away at the same time, only one pay-out would be made.
There is an option for a joint life policy on a ‘second death’ basis, which will pay out on the death or diagnosis of a terminal illness within the policy term on the surviving partner. However, these policies are rare.
If you are taking out joint term insurance, the policy will last for a fixed amount of time that is decided by you and your partner. It is important to consider your circumstances in order to decide how long you may need cover for.
You may take out a joint decreasing term policy, which usually runs for the same amount of time as your repayment mortgage.
Either way, a joint policy will usually expire after the first partner has passed away. A joint policy may be helpful if you both require a similar amount of cover for the same amount of time.
A joint life policy can have its advantages. Joint cover will pay out regardless of which partner dies, and it is usually cheaper than taking out two single life policies.
Joint life policies are also helpful if you are looking to cover a mortgage. This is because the mortgage only needs to be paid off once, so the pay-out from the policy can meet this requirement.