What is joint life insurance?

Joint life insurance can cover you and another person under a single policy, with one premium. You could apply with your partner, spouse, or even a business partner in some circumstances.

If one or both of you die, your joint policy would provide a financial payout to support with things like future costs or outstanding debts.

While joint life insurance covers two people, it usually only pays out when the first person dies. However, this can vary from one provider to another.

A joint life insurance policy may be a cheaper option than setting up two individual life insurance policies. But there are exceptions, for example, where one of you is much older or in poor health.

How does joint life insurance work?

A joint life insurance policy usually only pays out once, but it can work in one of two ways:

  • First death policies. When one person dies, a claim can be made by the surviving policyholder for a payout. The policy will end at this point, and the surviving beneficiary will no longer have any cover. So, they may choose to purchase a new life insurance policy.
  • Second death policies. This only pays out when both policyholders have died.

Most insurance providers offer first death policies, so we will mainly focus on this type throughout this guide.

Life insurance products have no cash-in value at any time. If the policy amount has not been paid out by the end of the selected term, the policy will end, and you’ll get no money back.

To keep your policy valid and active, you need to keep up with your premiums. If you don’t pay your premiums on time, your cover will stop. Again, your policy will end, and you’ll get no money back.

It’s also important to make sure all information provided to your insurer is honest and accurate.

 

  • Joint life insurance may be suitable for couples, but can give reassurance in other scenarios too:

    • People who own a home together. One person could be left with the mortgage payments if the other person were to die.
    • Working parents with a young family. If one parent died, the costs of raising children would become the sole responsibility of a surviving parent or guardian.
    • Business partners. A joint life insurance policy could provide a financial payout to a surviving business partner, potentially helping to settle company debts and other liabilities.
  • Whether you choose joint or single life insurance will depend on your needs and circumstances. You should consider:

    • Difference in earnings – even if there is just one main earner or employed person in your household, a joint life insurance policy could be worth considering. Either party may struggle to manage all your financial commitments and childcare responsibilities on their own. A payout may help to relieve the financial strain.
    •  Costs – with a joint life insurance policy, you’ll have just one premium to pay. However, a first death policy will only pay out if one policyholder dies, and only once. The policy will then end. The surviving person may then find it more costly to get life insurance of their own, based on factors including their age and health.
    •  Amount of cover – if each of you need a significantly different amount of cover, you might prefer to take out single life insurance policies. For example, if one of you has a much higher personal income and could manage with less cover.
    •  Future needs – agreeing to a joint life insurance policy is a big commitment. If your relationship ended, you might have difficulty dividing your policy. Joint life insurance may be more appealing for couples who have shared financial commitments, such as a mortgage.
  • When it comes to joint life insurance, what might be an advantage for one couple could be a disadvantage for another. It’s important that you both weigh up your options before you go ahead.

    Features of joint life insurance:

    • Cost – if there’s not much difference in your age and health, a joint policy may be cheaper than two single policies.
    • Equal payout – even if one of you earns more than the other, the payout in the event of a claim would be the same as it’s based on the cover amount you’ve chosen.
    • Less paperwork – with a single policy and premium to manage, you could save time as well as money.
    • Useful for joint mortgages – a first death joint policy could help the surviving person to manage ongoing financial commitments.
    • You don’t have to be married – joint life insurance cover can be purchased by any two people – even business partners.

    Things to consider:

    • With first death policies, once one party dies the other no longer has cover. This could lead to more expensive cover for the surviving partner if they decide to take out a new policy, based on their age and health.
    • Separation – anything joint can be tricky to untangle if, for whatever reason, your relationship ends. Most joint life insurance policies can’t be split into two separate policies. Starting a new single life insurance policy is likely to be more expensive. You’ll be older, and the new policy will be based on your age and lifestyle when you buy the cover.
    •  Single payout – a joint life insurance policy pays out once, and only when one or both of the policyholders die, depending on the policy you have. Single life insurance policies will each pay-out individually.
    •  Age and health – a joint life insurance policy could be more cost effective than two single policies. However, the premium is still affected by factors including your lifestyle choices, pre-existing health conditions, and ages.
  • The amount of joint cover you can get varies depending on how much you choose. But the payout can also vary based on whether you pick level term life insurance or decreasing cover.

    Level cover

    With level cover, the premium you pay and the cover you receive stays the same until the end date of the policy. For example, say you take out a £250,000 joint level term life insurance policy over 25 years. If you needed to claim while the policy is in place, the payout would be £250,000.

    Decreasing cover

    Many people take decreasing cover alongside a repayment mortgage. The premium you pay stays the same, but the level of cover decreases as you make repayments, potentially making decreasing cover cheaper than level cover overall.

    For example, imagine you have a mortgage and a decreasing term life insurance policy that covers your mortgage amount, both lasting 25 years. If you needed to claim while the policy is in place, the payout would roughly match the outstanding mortgage balance.

    Joint life insurance and critical illness cover

    You may choose to combine your joint life insurance with critical illness cover. This would also provide financial support to you and your family if you were diagnosed with an illness covered by your policy. You can purchase this alongside a Lloyds Bank life insurance policy, or separately if you’d prefer.

     

  • We don't currently offer joint life insurance online. However, you can speak to one of our experts at Cavendish Online to get a quote and discuss your options. 

    Like us, they are part of Lloyds Banking Group and can give guidance on Scottish Widows life insurance policies. You won't be charged for their help and you're under no obligation when you speak to them. To be eligible, you need to be a UK resident, aged 18 or over, and under 70.

    Call Cavendish Online on 0800 131 0297 or request a callback. 

    Lines are open Monday to Thursday 10am -7pm, Friday 10am- 6pm.

 
Frequently asked questions

Frequently asked questions about joint life insurance

  • It may be more cost effective to purchase joint life insurance, rather than two single policies. But it depends on your individual circumstances. For example, if one of you is in poor health, or much older than the other, it may increase the overall price of your policy.

  • It may be more cost effective to buy a joint life insurance policy as a couple. In the event of a claim, any payout received could be used to settle any financial commitments. However, a first death policy will only pay out if one policyholder dies, and only once. The policy will then end.

    The surviving person may then find it more costly to get life insurance of their own, based on factors including their age and health. Consider your current and potential needs before you both decide on the best option for your situation.

  • In a situation where a couple separate or divorce, there’s no simple answer on what happens to a joint life insurance policy. Your options may depend on the policy provider.

    • Some will allow you to split the policy, creating two separate life insurance policies.
    • It could be the case that just one of you takes over the policy. Especially in instances where joint life insurance policies can’t be split, or you’re tied in for the lifetime of the policy.
    • A last option may be to cancel the policy entirely.

    It’s worth noting that starting a new single life insurance policy is likely to be more expensive, based on factors like your age and health.

    Referring to your joint life insurance policy terms and conditions is always a good place to start.

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