Understanding life insurance for couples
Life insurance is important for everyone, especially if you have a partner or children. For couples, life insurance provides the surviving partner with a financial safety net if one of you passes away. It can help cover expenses, such as mortgage payments, and replace lost income. This can offer stability during a difficult time.
If you have a family, life insurance is often vital for protecting your children’s future. It can help with major costs like childcare, as well as everyday living expenses.
When choosing life insurance, a key choice for couples is between joint policies and individual policies. This can be tricky, as it depends on several things, such as your finances, health and who or what you want to protect. To help, we’ve outlined the advantages and potential downsides of both policy types. That way, you can choose the one that best suits your family’s needs.
What is a joint life insurance policy?
A joint life insurance policy covers two people, typically a couple, under one plan. It pays out a lump sum if the first person dies during the policy term. This provides financial support to the surviving partner, helping them cover important costs and living expenses.
Once the policy pays out, it ends. This means there’s no payout if the second person dies.
What are the advantages of joint life insurance?
- Shared financial protection: If you and your partner have shared financial responsibilities, like a mortgage or raising children, joint life insurance offers shared protection. This means the surviving partner is financially covered if one of you passes away
- More affordable: Joint life insurance is generally cheaper than two individual policies, making it ideal for couples looking for affordable cover
- Simpler to manage: With only one policy to manage, it’s less time-consuming compared to handling two separate policies
- Not just for couples: Friends with shared financial responsibilities, such as a mortgage, and even business partners can also take out joint life insurance
What else should I know about joint life insurance?
- Only one payout: If both partners pass away during the policy term, the insurer only pays out once. But if each partner had their own individual policy, the insurer would pay out on both, doubling the financial support for loved ones
- Loss of cover: If one partner dies, the surviving partner is no longer covered. To stay insured, they’d have to take out a new policy. The new policy could be more expensive due to age or health changes
- Policy cancellation on separation: If you and your partner split up, you might need to cancel the joint policy. This means you’d lose any premiums you'd already paid. You’d then need to take out new, individual policies. Some joint life insurance policies might allow you to split them into two separate policies, but this depends on the provider, so it’s important to check with them before making a final decision
What is a single life insurance policy?
A single or individual life insurance policy covers one person. If you and your partner each take out a single life policy, you are both individually insured. This means that if one of you passes away, the policy will pay out and the surviving partner’s policy will remain in place.
What are the advantages of single life insurance?
- Individual cover: As we mentioned earlier, each person gets their own policy. If one partner passes away, the other person’s policy continues as usual
- Customisable policies: You can customise your cover to fit your needs. This includes choosing different cover amounts, terms and beneficiaries. This flexibility could be helpful in complex family situations
- No policy cancellation if you split: If your relationship ends, you don’t need to cancel or split your policy. Each partner keeps their existing policy, making things simpler and less complicated
- Double payout: If both partners pass away, both policies will pay out. This means your loved ones will get a larger total amount. With joint policies, there’s only one payout
What else should I know about single life insurance?
- Separate payments: If you and your partner have individual single life insurance policies, you will need to make separate monthly payments for each one. This is unlike a joint policy, where there’s only one payment to manage
- More to manage: You’ll need to keep track of different premiums and cover details. This could be more complicated and time-consuming than managing one joint policy
- No shared benefits: With joint policies, the surviving partner is usually covered automatically. But with single policies, each person is covered separately. If the single policies are from different providers, there may be gaps in cover or different claim processes that you need to be aware of
Joint or single life insurance: which is better?
The best type of life insurance will depend on your personal circumstances.
Some couples might prefer joint life insurance, especially if they want to keep costs down with a single monthly premium.
Other couples might choose single life insurance to make sure each partner has their own cover. They might also want their children to receive a double payout if both parents pass away.
Choosing the right life insurance is a personal decision. When deciding between joint or single policies, take time to carefully consider both options and see which one best fits your needs. It’s also important that couples compare quotes from various providers and assess their specific circumstances to find the most cost-effective option.
Key takeaways
- Life insurance can be important for couples, particularly those with children who rely on them financially. Whether you choose joint or single life insurance depends on your specific needs, so it’s essential that you compare policies and quotes to find the best fit
- Joint life insurance covers two people and may be more affordable and easier to manage than single life insurance. But it only pays out once, even if both partners pass away. When one partner dies, the surviving partner might receive the money quickly, but they’ll need to take out a new policy afterward. If the relationship ends, the policy will need to be split or cancelled
- Single life insurance insures each person individually. It allows partners to customise their cover and name different beneficiaries, if needed. If the relationship ends, each person can keep their own policy. If both partners pass away, their loved ones will get two payouts