How do joint life insurance policies work?

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Life insurance comes in many forms, and choosing the right policy for you and your loved ones is one of the biggest decisions you’ll make, particularly if you’re married or in a long-term relationship. Many couples choose to bring their policies together as joint life insurance, while others prefer to have two separate policies.

In this guide, we look at whether a joint life insurance policy could be right for you – or whether two individual policies would be the better option. Discover the key features of joint policy life insurance, how it differs from a single life policy, as well as exploring the pros and cons of joint life cover.

What is joint life insurance cover?

As the name suggests, a joint life insurance policy is generally designed for two people who are part of a couple. It provides cover for both partners at the same level, and for the same period. 

Joint life insurance policies most commonly offer protection for married couples. However, they’re also available for couples who aren’t married – and can even cover business partners who want to look after their company in the event one should pass away. 

When seeking out the best joint life insurance policy, the main thing to remember is that it’ll only pay out once. Depending on your insurer, a lump sum can either be paid after one partner passes away, which is known as a first death policy, or when both policyholders are gone, known as a second death policy. 

Couples often choose joint life cover to simplify their insurance – and because it can work out more cost-effective than two separate policies in some cases.

How does joint life insurance differ from single life insurance?

The main difference between joint and single life insurance policies is the number of people covered and when a payout is made. 

Single life cover only provides insurance for an individual. As the policyholder, your loved ones receive a payment if you pass away during your policy term – as long as all the other terms and conditions have been met. 

In contrast, joint life insurance covers two people. You only pay one monthly premium, which applies to both partners. Most joint life policies pay out after the first partner passes away to ensure the person left behind has the financial support they need. That payment then ends the policy, leaving the surviving partner without any further life cover.

Do I need single or joint life insurance? 

It’s important to remember that both single and joint life insurance policies are available to couples. Deciding which is right for you will ultimately come down to a range of factors, including:

• Your budget. Joint life cover is often cheaper than two individual policies. That’s because it only offers one payout – either when the first partner dies or after both have passed away.

• The payout options. With separate single life cover policies, two lump sums will be paid – one for each partner’s policy.

• Their levels of cover. Because joint life insurance offers one policy for two people, the amount of cover and term are the same for both partners. You may find this restrictive if you and your partner need significantly different levels of cover.

• Your future needs. A joint life insurance policy financially binds you and your partner together. In the event your relationship ended, it might prove difficult to later divide your policy into two separate ones as typically both of you will need to agree to this. 

Benefits of single life cover

The benefits of having two single life insurance policies for couples include:

• The ability to set different levels of cover for each partner.

• The payment of two lump sums, rather than one. 

• The remaining partner will still be covered after the other passes away.

Single life policies may prove particularly attractive to younger couples, who may have children to support and mortgages to pay off. They can also offer more flexibility if one partner requires additional cover, because of a health condition, for example.

Benefits of joint life insurance

Joint policy life insurance also offers many potential benefits to couples. For example:

• Fewer applications for insurance and one regular payment.

• You can get joint life insurance if you're not married, or if you've already tied the knot.

• A lump sum could be paid faster because you've clearly nominated who should receive the money after your death. 

Joint life cover may prove particularly beneficial if you’ve already made large financial commitments with your partner, such as taking out a mortgage. That’s because it can help tackle those costs if one of you passes away. Older couples who are in secure, long-term relationships may also find it more appealing.

Joint life insurance FAQs

Who benefits from a joint life insurance policy?

Generally, the surviving partner in a couple benefits from a joint life insurance policy. Most of these policies make a lump-sum payment and come to an end after one partner passes away. However, some pay out when both partners are gone (known as ‘second death’ policies).

Who is the claim paid to?

Once a claim is approved, the money is paid out to the legal owner of the policy, usually whoever is named as the policy owner on the policy schedule. If that person has died, we’ll pay the person named as the executor in the policy owner’s will. It’s always a good idea to make sure you tell the person if you have named them in your will, as this will help to ensure the payment is made more quickly to the right person.

Does my spouse automatically get my life insurance?

It all depends on the type of life insurance policy you have. With joint life cover, any payments will be made to the person you share the policy with (generally your spouse). However, single life policies give you more flexibility over who receives the money, and you can name a beneficiary other than your spouse.

Are joint life insurance policies cheaper?

Joint policy life insurance often works out cheaper than single life insurance because it only pays out once and provides both partners with the same level of cover. Couples with two single life policies may pay more for their insurance. However, they can tailor their levels of cover, and their loved ones will ultimately receive two lump sums.

Discover your life insurance options with LV= today.