Finding that special someone is a wonderful part of life, setting you on your way to starting a family. But how can you ensure your family and spouse are protected should something happen to one of you.
If you didn’t know already, it’s possible to get life insurance cover for more than one person. Joint life insurance is a great way to provide cover for you and your partner or spouse should the worst happen.
In this article, we’ll take a look at how joint policies work as well as the types of cover available.
Table of Contents
What is a joint life insurance policy?
Joint life insurance provides protection for two people under a single life insurance policy. This type of ideal for couples as it pays out a lump sum when either you or your spouse dies.
The surviving party would then be able to use the money towards supporting your children and various future finances. Joint life policies can often work out cheaper and easier to manage than buying individual policies for you and your partner.
Joint policies have two levels of cover: first death and second death. With the first death, the policy pays out after the first death in the couple. The policy then ends, meaning the surviving member would need to take out additional cover if needed.
Second death policies payout once you and your partner have both passed away. The money can then be used to support your children, setting them up for the future.
Just like with any type of life insurance, when you take out the cover you begin paying monthly premiums to your insurer. Even though joint policies cover two people, you and your partner only need to pay one set of premiums.
Types of policies
There are two main types of life insurance that can be bought as a joint policy. These are whole life insurance and term life insurance – both of which differ in terms of the cover length and cost.
Whole life insurance
Whole life insurance provides permanent protection for you and your partner. When one of you (or both) dies, your insurer pays out a cash lump sum to the surviving partner.
The main benefit of whole life cover is that a pay-out is guaranteed, no matter when you or your partner may die. Whole life insurance tends to be more expensive than term life policies, however, it provides long-lasting cover, giving you and your loved one peace of mind.
Term life insurance
Unlike whole life, term life insurance has an expiry date, meaning that it only covers you and your partner for a limited period (i.e 20 years or so). The policy only pays out if you and your partner happen to die within this time. If not, the policy expires and you won’t receive any money back on the premiums paid.
There are 3 types of term life insurance:
- Level term – The pay-out amount and premium cost are fixed throughout your cover. It’s best to apply for this type of cover at an early stage to keep your premium costs at a low.
- Decreasing term – Designed to cover large payments such as a mortgage. This type of cover is ideal if you and your partner share responsibility for your home’s mortgage. The pay-out amount decreases
- Increasing term – Designed to protect the eventual pay-out amount from inflation. The pay-out amount increases overtime to keep its value, however, your premiums can also rise.
Who needs joint life insurance?
There are a number of people who are suited for joint life cover such as:
- Married Couples
- Young families
- Long-term partners
- Families with older children
- Business partners
In general, you should consider buying joint cover if you have dependents (i.e a spouse or children – or both). The payout from the policy can be used to help you or your partner with finances such as living costs, household bills, and funeral expenses. This money can also be used to help support your children with future finances like buying a home of their own.
What happens to my policy if I get divorced?
It’s never a nice time when a marriage breaks down and naturally, it will impact a joint life policy. Sadly a policy can’t be divided into two separate policies, leaving you with two options.
You can either cancel the policy, in which case you won’t receive any compensation for the premiums already paid. However, whole life policies often have a surrender value, though the amount you receive may be much lower than the pay-out value of your policy.
The other option is to transfer your policy to either yourself or your ex-spouse. One of you will then take over the policy whilst the other part will need to take out further cover if required.
So, if you’re ready to get life cover for you and your partner, head online to get a quote, today!
