Understanding joint life insurance
Life insurance is a funny old thing. When you buy other types of cover, the thing that you’re insuring against (touch wood) may never happen – damage to your car, maybe, or a burglary. With life cover though, it’s a bit different. You’re buying a policy to help to give you peace of mind and to protect your family.
While money can never replace a loved one, it can help to relieve financial burdens at a difficult time. If you pass away with a joint life insurance policy in place, it means your partner will get a sum of money to take care of the bills or the mortgage. Also, because you have already arranged who will receive the pay-out if the worst were to happen, this can speed up the payment of a tax free pay-out to help you when you need it most.
Your insurance covers both you and your partner, and pays out in the event of one of you passing away. However if you wanted to continue the policy for your partner if you’re no longer around after it’s paid out, you would need to extend the cover or buy a new policy.
Why do people buy life insurance?
Typically people buy life cover to pay off the mortgage, so their family wouldn’t have to worry about paying for their home when they’re no longer around to help contribute to the bills.
The cash could also be used to pay funeral costs, repay debts or support your family in some other way.
Yes, but what’s this ‘joint’ business?
A 'single' life insurance policy just covers one person, and pays the chosen amount of cover if that person passes away while the policy’s in place. A 'joint' life insurance policy covers two people’s lives and the chosen amount of cover is paid out when the first person passes away.
Joint life insurance first to die
A joint life insurance policy is sometimes called a ‘first to die’ policy, because it only pays out once. In that situation, the person who is left will no longer have any life insurance. The alternative is to have two single life policies, then if the first person passes away, the other person still has their own cover.
Both single and joint life insurance policies have their own pros and cons, so when you’re thinking about the options there are a few things to consider.
First is cost. A joint life policy might be cheaper than two single life cover policies, but that does depend on your circumstances. And then you should think about whether both people have the same life insurance need. If only one of you works, do you both need to be insured for the same amount?
Joint term life insurance
Usually, an insurance policy is for a fixed amount of time, say 10, 20 or 25 years. This is known as the ‘term’, which simply means how long the policy lasts for.
There are two kinds of term insurance to choose from: level-term life insurance or decreasing term.
Level-term life insurance will give you the same amount of cover at all times throughout the life of the policy. So if you pass away while the policy’s in place, your family gets a set amount, say £150,000, in line with how you’ve set it up.
With decreasing term life insurance, the pay-out gets lower as time goes on. The idea is that your family might need less money as the years pass – say because you’ve paid more of your mortgage off. With decreasing term cover, if you passed away in the first year of the policy the pay-out might be £150,000, while in year 14 of a 15 year policy, this might drop to something around £20,000. Decreasing term cover is usually cheaper than level-term, however it’s important to consider your needs carefully and choose the right policy for you.
How do we decide what we need?
It’s a personal choice and it will depend on a few things: what you can afford to pay, what your situation is as a couple and what your family would need if the worst were to happen to one of you. A good place to start is to do a comparison on a site like this so that you can compare a wide range of joint life insurance quotes. You’ll need to set a time limit on the cover – how long you want it to last. This could be the time left on your mortgage, or when you think your children might not need your financial support any more – make sure you consider your needs carefully.
Then you just need to tell us whether you’ve smoked or used anything containing nicotine in the last 12 months. Insurers usually charge more for a smoker’s policy because of the health risks.
Just click here to start comparing joint or individual policies. If you choose joint, you’ll see a page with each joint life insurance quote from providers that can cover you, listed in price order with the cheapest quotes at the top. You can explore different prices by changing the length of the policy and the amount your family would stand to receive. All it takes is a few simple clicks.
When you look at the different offers on our quote page, do consider more than just the price. The cheapest option is not necessarily the best. Check what’s included and the small print before you buy. If you have any questions you can also call and talk to one of the LifeSearch experts on the number shown above.
While the purpose of life insurance really isn’t nice to think about, one day, you or your family could be glad you did. Let us help you find the right cover to give you that peace of mind.
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