Life insurance policies typically cover one individual and pay a lump sum to their beneficiaries in the event of their death. But joint life insurance policies do exist. If you and your partner are both considering taking out life insurance, you may want to look at joint life insurance as well as separate policies.
Single life insurance
Single life insurance is when one person insures themselves against (an early) death. The individual will pay a monthly payment to the insurer, and the insurer will pay a designated person or designated people a lump sum upon your death, as long as you pass away while you’re insured.
The most popular life insurance policies insure you against death for a fixed period. If you survive this period then you’re no longer insured and you don’t get your monthly payments back. You may then want to take out another life insurance policy. Or your loved ones may be more financially secure with fewer debts, and you may not think life insurance is financially needed anymore.
Joint life insurance
Joint life insurance is a policy that covers two people as described above, but it only pays out once upon the death of the first person. Joint life insurance only requires one monthly payment to cover both people, as opposed to having two single life insurance policies which would require separate monthly premiums.
For example, if Mark and Sharon have joint life insurance and Mark passes away, the policy will pay out and Sharon will no longer be covered. She would need to take out a new single life insurance policy if desired.
Some joint insurance policies will end if the relationship or marriage ends. However, some policy providers can split joint life insurance into two single policies when this happens.
Difference between single and joint policies
The difference between a single and joint life insurance policy is that the former only covers one person while the latter covers two people. Both types of life insurance only require one monthly payment and they both end after the death of the first person.
Another difference is the average cost of these policies. Money Super Market looked at the cost of life insurance policies and found that the average cost of taking out a joint life insurance policy is somewhat cheaper than taking out two separate policies. However, the insurer will take into account ages and health before providing a quote, so it may not always be the cheaper option.
Should I take out a single or joint life insurance policy?
The decision to take out single or joint life insurance should only be based on both your individual circumstances and your objectives of taking out life cover. Our friendly Moneysprite team are always happy to discuss your needs and answer your questions. We can even help you find and apply for your life insurance. Reach out today!