Joint life insurance

Many couples choose to enjoy the benefits of life insurance together, so they purchase a joint life insurance policy. It means if the worst happens and one partner passes away, the surviving partner gets some much-needed financial protection. In this article, we'll look in more depth and joint cover and whether it's right for you.

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What is life insurance?

Firstly, let's look at what life insurance is in its most basic form. If you take out a life insurance policy and you pass away while you're covered, the person you nominated as a beneficiary receives a lump sum of money.

People buy life insurance policies for many reasons. Sometimes they use it to make sure their financial obligations (such as a mortgage) would be met if they unexpectedly pass away. Others use it to provide financial help for their loved ones if they're not around. Perhaps the most significant benefit of life insurance is the peace of mind it brings.

You can find out more in our article, What is life insurance?

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What is joint life insurance?

Joint life insurance is one of the many different types of life insurance policies available. It's designed to cover two people, rather than more conventional single life insurance policies.

In a joint life insurance policy, both partners are covered for the same amount, for the same length of time. They pay one premium to cover them both. If one partner passes away, the lump sum benefit goes to the surviving partner.

Couples take out joint life insurance policies for a variety of reasons, including:

  • Covering financial obligations (e.g. mortgage payments, childcare)
  • Providing for children if one partner isn't around
  • Peace of mind that they're doing everything they can to safeguard their family unit

As well as paying out if one partner passes away, a joint life policy will also pay out if one partner is diagnosed with a terminal illness with a life expectancy of 12 months or less.

  • Only 35% of Britons have life insurance cover despite a majority of people understanding its benefits - Source

How does joint life insurance work?

Firstly, you need to select the right type of joint life insurance for you. There are several different types available which all lead to different outcomes.

During your policy term (if you have one), you must keep up with your premium payments to your insurer. If you miss payments, your joint policy may be cancelled.

If you or your partner passes away during the policy term (or is diagnosed with a terminal illness), the surviving partner will receive the cover amount as a lump sum.

In most cases (depending on the type of policy you choose), your joint policy will come to an end once the payment has been made. This means the surviving person is no longer covered by life insurance.

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Types of joint life insurance

There is a wide range of different types of joint life insurance policy available. Each is slightly different and has its own pros and cons. Use this guide to select the right type of joint policy for you.

Check out our article on types of life insurance where we go deeper into each type, including its benefits and drawbacks.

Level term

Level term is the most common type of life insurance policy. This may be because it's the most straightforward. If you're thinking of getting joint life cover, it's a great option.

You simply decide how much cover you need and how long you want the insurance to last for (the term) and you're covered, as long as you keep up with your monthly premiums.

If you or your partner pass away, your insurer will pay out. However, your joint life insurance policy will end at that point and the surviving person will no longer be covered.

Decreasing term

Decreasing term life insurance is like level term, except the amount of money you are covered for reduces over the course of the term. Your premiums remain the same.

Decreasing term is a great option if you're using your joint life insurance to cover your mortgage payments. As time goes by and your outstanding amount goes down, you don't require as much life insurance cover. Decreasing term is typically cheaper than level term.

Whole of life cover

Whole of life cover is as it says. Rather than having a set term for your joint life insurance policy, it covers the whole of your life with a guaranteed payout, as long as you continue to pay your monthly premiums.

However, it will only pay out for one person. When the first partner passes away, the policy ends. Whole of life cover is usually the most expensive type of life insurance policy.

Second death policies

Every joint life insurance policy we've talked about so far covers both partners, but will only pay out when the first partner passes away. Second death policies are different because they pay out when the second partner passes away.

Second death joint policies are quite rare and aren't offered by all insurers. They're usually whole of life policies and used to mitigate inheritance tax rather than to give financial protection to loved ones.

Critical illness cover

Critical illness cover is an optional extra to most joint life policies. If you choose to add critical illness cover, you will find a list of serious illnesses in your policy documents specified by your insurer.

If you or your partner are diagnosed with one of these illnesses during the term of your joint policy, your insurer will pay you a portion of your cover amount. You could use this money to support yourself and your family if you are unable to work as you recover.

"I recently got an insurance policy through myTribe and the service was excellent from start to finish. The adviser that I spoke to was very patient and took time to explain all of the intricacies to me so that I felt confident and informed when making a decision."

by Chris Stratton - 12th May 2022
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Why do I need joint life insurance?

There are several significant benefits to getting life insurance, including:

  • Being able to meet your financial commitments and support your family's lifestyle after you've gone
  • Paying funeral costs
  • The peace of mind that comes from knowing you're looking after your loved ones if the worst were to happen

However, there are more benefits that are unique to joint life insurance and make it a great idea for you and your partner.

Affordable payments

Joint life insurance is typically cheaper than getting two individual policies. This is because it only pays out once, when the first partner passes away or is diagnosed with a terminal illness.

Another reason joint life insurance policies may be cheaper is that statistically, people in couples live longer than single people. Therefore, couples are less of a risk for the insurer.

Equal cover

With joint life insurance, you and your partner are covered equally. No matter which one passes away first, the payout is the same.

There's also only one form to fill in, which cuts down on the admin.

Faster payout

It usually takes a shorter time to settle a joint life insurance claim compared to single life insurance. This is because it's already clear that the beneficiary is the surviving partner.

With conventional life insurance policies, there is often more admin when it's time to claim. This is because the executor of the Will needs to get involved. There may also be issues with inheritance tax.

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Joint life insurance vs single policy

On the other hand, there are a few reasons why single life insurance might be a better option than joint cover.

Only one payout

Joint life insurance only pays out once. Most of the time, it's when the first partner passes away. (Second death policies pay out when the last partner passes away.) After the payout, the policy ends.

This can be a problem because once the payout has been made, the partner that survives is no longer covered with life insurance. If they wish to cover themselves from that moment, there's more admin to go through (at an already stressful time). It's also likely that your new policy will be more expensive, as you will be older and inflation will have had an impact.

Separation is difficult

If you and your partner separate and you want to disentangle your joint life insurance, things can get a little tricky. You may have to cancel the entire policy, meaning you and your ex-partner will need to purchase their own single life insurance policies if you want to remain covered.

You might not want to be equal

While it's certainly convenient for you and your partner to be covered for an equal amount on your joint life policy, it may not lead to the best financial outcomes if either of you unexpectedly passed away.

If you earn significantly more than your partner (or vice versa), your family income would take a bigger hit if you passed away, compared to if your partner did. In this situation, it may be better for both of you to take out separate policies in order to safeguard the family finances if the worst happens.

Not always cheaper

While joint life insurance policies are usually cheaper than single cover, this isn't always the case. If one partner is significantly older than the other, or has suffered with medical issues while the other one has stayed healthy, the cost of insuring that partner could push up the total cost of the joint policy.

If this is the case, it may be cheaper in the long run for you and your partner to get your own separate policies.

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How much joint life cover do we need?

Deciding on how much joint life cover to buy takes some consideration, as you don't want to pay too much while you're alive, or be under-insured if you or your partner passed away.

Here are some things to think about as you decide:

  • Your mortgage - How long is left on your mortgage and how much do you owe?
  • Your family finances - What living expenses do you have? How much would your partner need to maintain their lifestyle if you passed away? Do you have savings?
  • Children - If you have children, how many years do you still need to support them financially?

If you want to use your life insurance benefit to cover your mortgage and nothing else, go for a decreasing term policy for the outstanding amount. However, if you want to provide for your family after you've gone, many couples go for a cover amount of 10X their annual income.

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Disclaimer: This information is general and what is best for you will depend on your personal circumstances. Please speak with a financial adviser or do your own research before making a decision.

Founder and Editor

As the founder and editor of myTribe Insurance, the role of Chris Steele is to ensure that the information we provide is of the highest quality and value to those who read it.

Frequently Asked Questions

What happens to my policy if my partner and I separate?

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If you and your partner separate and no longer want to continue with your life insurance together, your options are:

  • Cancel your policy. Then, you can take out your own life insurance cover if you wish, as can your partner
  • Take over the policy yourself, so your ex-partner can then take out separate cover if they wish

A downside to taking out new individual policies is that your premiums may be more expensive than when you took out the original cover. This is because of inflation, as well as your increased age making you more of a potential insurance risk.

Can I have a single life insurance policy as well as my joint cover?

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Yes. You can have as many life insurance policies as you like. Having an extra policy might be a good idea if you earn significantly more than your partner and you want to safeguard your family income if you were to unexpectedly pass away.

Can I only get joint life insurance with my romantic partner?

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No. You can get joint life insurance with anyone you wish. While it's most common to get joint life insurance with your romantic partner, business partners often take out a joint policy to protect their business interests.