Single vs. Joint Life Insurance for Couples
Last updated: 14/06/2023 | Estimated Reading Time: 12 minutes
In a long-term relationship, it’s important to have open and honest conversations about your finances, especially if you share large financial commitments like a mortgage. These conversations should also extend to difficult topics such as what would happen if one of you died prematurely, even though it’s upsetting to think about these scenarios.
Should the worst happen, it’s better to be prepared in advance so that the surviving partner and any dependants will be financially protected. For many couples, a life insurance policy will go a long way towards providing a reassuring safety net.
However, could joint life insurance be a better option for you and your partner? There are many factors to consider when choosing joint life insurance or single life insurance, including the cost, how much cover you need, pre-existing medical conditions and changing circumstances.
Below, we’ll walk through all of these considerations to discover the best life insurance for couples.
The standard life cover option for most people is single life insurance.
This type of policy pays out an agreed lump sum of money upon the death of the policyholder. This money will be granted to their beneficiaries, usually with the purpose of covering funeral expenses, mortgage repayments, education costs, household bills and all other types of living expenses.
Typically, the main options for single life cover are term life insurance (including decreasing term and increasing term options) and whole-of-life insurance. The former will only cover you for a set period of time, after which the policy ends and you’ll no longer receive a payout after death, but the latter offers guaranteed life cover at a higher price.
Joint life insurance covers two people within one policy. Usually, these two policyholders will be married, civil partners, in a long-term relationship or, in some cases, business partners.
Since this is one life insurance policy covering two people, there will be one application, one medical risk assessment and one monthly premium to pay.
To work out the monthly premiums for joint life insurance policies, insurance providers will ask both partners about their lifestyles and medical histories. They’ll then use the information from both partners to calculate the risk of covering them.
Even if only one partner has pre-existing medical conditions or is considered high-risk, this will increase the couple’s joint premiums.
Unlike two single policies, a joint life insurance policy will only pay out once, usually to the surviving partner after the other partner dies within the policy term. The potential beneficiaries of the surviving partner will therefore receive nothing upon their death because the policy ends when the first partner dies.
Some insurance providers may allow you to switch the payout to the second death. Therefore, you have a choice between a first-death policy and a second-death policy:
A joint policy will generally be cheaper than two single life insurance policies because you’ll just have one monthly premium to pay for both of you. The actual figure will vary depending on your circumstances, but you can expect to pay around 25% less for a joint life insurance policy compared to two single policies.
As mentioned earlier, the cost of your monthly premiums will be affected by you and your partner’s medical history and pre-existing conditions. If one of you is much more high-risk, it may be worthwhile to get individual policies as your partner’s risk level could drive up the cost of your joint premiums.
Just like with single life insurance, there are a few cover options to choose from when you’re hoping to buy a joint policy. Here are the main types of joint life insurance cover you can choose from:
When considering joint life insurance vs single life insurance, there are multiple factors you need to look into, including the cost, the level of cover offered and how potential future events could affect your policy.
Joint life insurance is very popular among couples who have recently started sharing finances or have taken on a joint financial commitment, such as a mortgage.
A joint policy in this situation can reassure couples that the surviving partner will be able to pay off their debts even if the other partner passes away.
A joint life insurance policy will cover the surviving partner’s financial needs while being less expensive than two single policies. If your main concern as a couple is being able to cover a joint debt such as a repayment mortgage, then a joint policy may be more cost-effective as only one payout will be strictly necessary.
Joint policies may be better if you only need the same amount of cover as your partner (i.e., to cover a joint mortgage), but if your cover needs are actually different, you may prefer single policies.
As an example, one person in the couple may earn significantly more money, and in that case, they may need a higher level of cover to pay their share of the family finances if they were to pass away. This couple could then choose two single policies with varying levels of cover or may choose to insure only one person as the main breadwinner.
However, it’s important to not just look at salaries to determine who needs life insurance cover. For example, the death of a stay-at-home parent could still be a significant financial blow as childcare costs would need to be covered, or the high-earning parent may have to cut down their work hours and therefore accept a salary reduction. This shows that joint policies may still be the preferred option for couples with unequal earnings.
In general, the financial needs of parents will greatly differ from childless couples. For example, you’d have to consider whether the single payout from joint life insurance would be enough to support the whole family, especially if the second parent also died and had no cover due to the policy ending after the first death. You may decide that you need two single policies to ensure that both parents can leave money for the children.
Of course, the surviving partner could then take out their own single life insurance policy once the joint cover ended, which would ensure that both partners can leave money for their beneficiaries.
However, it’s likely that the surviving partner could be significantly older by this stage, which will make their monthly premiums more expensive if they buy a new policy compared to buying a policy earlier in life. Moreover, separations can be a huge issue with joint life insurance policies. Although some insurance companies offer a ‘separation option’, which will allow you to split the joint policy into two single policies, most couples will have to cancel their joint policy if their relationship breaks down.
To summarise the joint life insurance vs single life insurance debate, here are the main pros and cons of joint life insurance:
The answer to this question will depend entirely on your personal circumstances and what you’re looking for in a life insurance policy.
Joint life insurance is very popular among couples with a large shared debt, such as a repayment mortgage, as joint policies are cheaper and offer enough cover for the surviving partner to pay off their debt.
However, some couples may want more comprehensive cover or more flexible cover, which would make single life insurance a better option.
Yes, a joint life insurance policy is usually around 25% cheaper than two single policies.
However, you and your partner’s medical histories, lifestyles and pre-existing conditions will influence the overall cost.
Critical illness cover is a pretty common life insurance add-on, and depending on your insurance provider, it can also be added to a joint policy.
Critical illness cover provides you with a lump sum payment to cover living costs if you are no longer able to work due to a serious illness or injury. The medical condition rendering you unfit to work must be included in your insurer’s list of covered conditions, otherwise you won’t receive a payout.
Some conditions may be excluded from cover based on your medical history and pre-existing conditions.
However, as with standard joint life insurance, your joint critical illness cover will only pay out once. Therefore, only one partner will be covered for periods of unemployment due to illness or injury, and the cover will end after they make a claim.
Please Note: Not all insurance providers we work with offer all types of policies. Please do your research and compare quotes before proceeding.
No, you won’t need to have a joint life insurance policy in order to get a mortgage.
On the other hand, some mortgage lenders will strongly recommend that you buy life insurance when getting a mortgage, as this will ensure that you and your partner can pay off the debt should the worst happen.
Joint life insurance is often recommended as a more affordable option that will give you the cover you need as a couple.
No, joint life insurance only ever pays out once. This is usually upon the first death within the couple (first-death policy), but some insurance providers will allow you to switch the payout to the second death in the couple (second-death policy).
Yes, you can write your joint life insurance policy in trust. However, this may not be necessary for some couples.
Typically, insurance policies are written in trust in order to legally bypass inheritance tax. Since married couples can pass on their estates to each other after death without paying inheritance tax, there’s no real benefit to putting their joint insurance policies in trust.
On the other hand, non-married couples can’t pass on their estates to each other tax-free, which means it could be a good idea for them to write their policies in trust to reduce their tax liability.
Family income benefit is a type of life insurance policy that pays out a regular monthly income to your beneficiaries instead of a cash sum.
You can choose to get a joint family income benefit policy with your partner, but as usual, this policy will only pay out once, typically when the first policyholder dies. The surviving person will then have to get their own individual policy if they want to remain covered.