Single versus joint life covers
LV= life insurance is available either as a single or a joint policy.
You can choose to take out a plan that covers just yourself, or your spouse, civil partner or someone you share a financial commitment with as well.
A single life plan insures only you and pays out if you die or if you're diagnosed with a terminal illness during the plan term.
As its name suggests, a joint life plan covers both people insured for the same amount of cover and length of time. Typically, joint life plans are taken out where the death of either person will have a significant impact on the lifestyle of the other, particularly where there are children involved. However, the plan pays out for the first death only. After that, the plan stops and the surviving person is no longer covered.
If the life cover is intended for a couple, then as an alternative to a joint plan, each person can take out their own plan on a single life basis. This allows them to choose different amounts and cover periods.
You may assume that taking out two plans rather than one joint plan is a lot more expensive. Indeed, taking out a joint life insurance plan normally costs less than two single plans.
Holding separate single plans has some great advantages:
- They don’t follow the 'first death' rule and if one person dies, the other would still be covered. This could potentially leave more money to your dependants.
- It can also be beneficial in the event that a relationship breaks down. Unlike a joint life insurance plan, two single plans are already separate. This means that your plan wouldn’t have to be cancelled in the event of a divorce, and you wouldn’t have to take out a new plan, which could be an issue, especially if you’re older or have suffered health problems.
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