Joint life insurance

Joint life insurance is a policy that covers two people but only pays out once. When one of you passes away, it typically gives a lump sum to the survivor.

Joint life insurance could be a cheaper option than two single policies for any couple who financially support each other in some way, including:

• Married couples

• Long-term partners

• Business partners

A joint life insurance policy only pays out once, and its timing depends on how your policy is set up:

• 'First death' policies – a pay-out is made when one of you dies. The surviving partner is then no longer covered. Most insurers only offer this type of joint policy.

• 'Second death' policies – a pay-out is made only after both of you have passed away (as long as the premiums have been paid). 

If both people insured died at the same time, the policy would still usually pay out once, with the money going to the appropriate beneficiary depending on how the policy was arranged.

A joint life insurance policy is designed to leave your partner and dependants with a financial safety net. The pay-out can be used for whatever they choose.

Many couples take out joint life insurance to cover: 

• Mortgage payments 

• Household bills 

• Childcare costs and education fees 

• Outstanding loans 

• Funeral costs.

The amount of cover you need is a personal choice and will depend on a number of factors. These include what you can afford to pay for the premiums and what financial costs your loved ones would face if the worst were to happen to one of you.

Yes, critical illness cover can be added to a joint policy. Critical illness cover is a type of income protection insurance. It provides a tax-free payout if you’re diagnosed with a serious illness.

However, it can only be claimed once between you. If one of you makes a critical illness claim, the other person will no longer be covered for it.

Also, be aware of ‘combined’ life insurance and critical illness policies. Once a claim for critical illness has been made, your joint life insurance policy will typically end for both of you.

Ben and his wife, both in their late 30s, live in Cambridgeshire with their two children under seven. They have a £260,000 repayment mortgage over 33 years and no existing cover.

They want a policy that would clear the mortgage if either of them died, plus extra financial support if one of them became seriously ill. Ben gets 12 months’ sick pay through work, but is unsure what benefits his wife receives.

After speaking to an insurance adviser, they choose joint decreasing life insurance to help pay off the mortgage if either of them dies.

They also add a smaller combined life and critical illness policy to help with household bills, funeral costs or medical expenses if either of them dies or develops a covered critical illness.