What is joint life insurance?

4 April2021

Joint life insurance is almost exactly what it sounds like: life insurance shared by two people. It has always been the tradition that the main breadwinner takes out life insurance to make sure their family would still have financial support in the event of their death. Many households are now supported by two incomes, however, and the loss of either could be financially devastating.

What does it cover?

A joint life insurance policy would cover both of the people specified in the policy. However, different policies work in different ways.

Some joint life insurance pays out upon the event of the first death. If one person dies, the surviving person receives the insurance money to help support the rest of the family - for example, to help with paying the mortgage.

Some joint life insurance pays out upon the death of the second person. This kind of policy is more commonly chosen to cover any inheritance tax, or to financially support any children left behind.

Advantages

Taking out a joint policy, though more expensive than buying a single policy, could be significantly less expensive than buying two single policies.
Peace of mind. Both of you are covered and both of you are beneficiaries. Whatever happens, the rest of your family will have some support.

Things to think about

If you are sharing a policy with your spouse, for example, and you break up, it may not be possible to split your policy into two - meaning the money you've put in could be wasted.
A joint plan may only be appropriate if you both have similar incomes. If one of you earns a lot more than the other, they may need to have a greater level of cover.
If the policy pays out on the death of the first person, the second person will no longer have any life insurance. Attempting to buy an individual life insurance policy later in life is often difficult and more expensive, so they may not be able to secure adequate cover in the future.
If both policyholders die at exactly the same time, for example in a car crash, only one payout would be issued (depending on the policy). This could be devastating to the family, who would have lost two members and may not have received enough money to cope on their own.
Remember that as with any life insurance policy, your family will only receive a payout if your policy is active and you fulfil all the terms and conditions. For this reason, you should always check the terms very carefully before you buy.

If you want to find out more about different kinds of life cover, click here for a quote.

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