Joint or single policy

What is Single cover?

Single life insurance cover is a type of life insurance policy that covers only one individual and provides coverage for that person only. It is typically chosen by individuals who are the sole breadwinner or have dependents who rely on their income. The policy pays out a lump sum of money to the designated beneficiary or beneficiaries if the insured person dies while the policy is in effect. The policyholder pays a regular premium for the coverage, and the amount of coverage and premium may vary depending on the policy terms and the insured person's age, health, and other factors. The policy remains in effect until the death of the insured person or until the policy is cancelled or lapses due to non-payment of premiums.

What is Joint cover?

A joint life insurance policy is a type of life insurance policy that covers two people, typically a married or domestic partner couple, under a single policy. The policy pays out the death benefit upon the first death of the two individuals covered by the policy, after which the policy usually terminates, and no further benefits are paid out. Joint policies are often less expensive than purchasing two separate life insurance policies and can provide financial protection for couples. However, joint policies may not be the best option for all couples, and it's important to carefully consider all the options and consult with a qualified insurance professional before making a decision.

What challenges might you face with joint coverage?

If you have a joint life insurance policy and your partner dies, you will need to take out a new single policy if you still need life insurance. The new policy is likely to have higher premiums as you will be older. If your relationship ends, your insurance provider may be able to separate your policy, but if not, you will need to take out new policies to continue to be covered. On the other hand, if you and your partner have single life insurance policies, you will remain covered regardless of whether one of you dies or the relationship ends. In summary, joint life insurance policies have certain drawbacks, and it's essential to consider all available options and consult a qualified insurance professional before making a decision.

Why opt for joint cover?

A joint life insurance policy is a good choice for couples with shared finances and a significant financial commitment like a mortgage. It can help pay off the mortgage in case of the death of either partner or is usually more affordable than two single policies. Joint policies are also easier to claim. In contrast, with two single policies, the money may take longer to reach beneficiaries and could be subject to inheritance tax unless placed in a trust.

The verdict

Deciding whether to purchase two separate life insurance policies or a joint one depends on your unique situation and reasons for getting life insurance. To make the right decision, it's important to consider factors such as the level of coverage you and your partner require, the nature of your relationship, and the costs associated with both options. Weighing these factors carefully will help you determine the best course of action for your needs.

The key differences between single and joint life insurance policies are as follows:

  • Coverage: Single policies cover one person while joint policies cover two people under a single policy.
  • Premiums: Joint policies are typically less expensive than purchasing two separate policies, but the premium for a joint policy may be higher than a single policy of the same coverage amount.
  • Death Benefit: Single policies pay out upon the death of the insured person, while joint policies pay out upon the first death of the two individuals covered.
  • Termination: Single policies remain in effect until the death of the insured person, while joint policies usually terminate after the first individual's death.
  • Underwriting: Single policies consider only one person's health and lifestyle, while joint policies consider both individuals.

It's important to consult with an insurance professional to determine which type of policy is best for your situation.