Which is better joint or single life policies?


Aug 18, 2016
Which is better joint or single life policies?

Life insurance is an especially well-established means of making financial provision for a surviving loved one or dependants when you die.   

 

Probably the most common form of such cover is so called level term life insurance – which guarantees a fixed lump sum cash payment to your designated beneficiaries if you die within the insurance “term”. If your death is sudden or unexpected, therefore, the cash lump sum might be used:

  • for investment, to provide an alternative source of income to your spouse or dependants
  • to pay for school, college or university fees for children who are still in education
  • to pay off an outstanding mortgage balance or clear other debts and lines of credit you had.   

Joint life insurance   

The typical circumstances described in this way are likely to apply to a couple – with or without children. Increasingly these days one member of that couple is likely to have a more or less equal dependence on the other, either in terms of income, or in terms of their contribution to running the household.   

Joint life insurance is intended for such couples and there are pros and cons which you might want to consider when deciding whether this is the type of cover for you – or whether you might be better off arranging separate life policies for each of you:  

 

Pros

  • a joint life insurance policy is likely to be considerably cheaper than two single life policies
  • if you have a spouse or partner but no children, joint life insurance ensures that your other half benefits from the assured benefits if you die, or that you do if your partner dies
  • if you are a childless couple, it is considerably easier to arrange joint life cover than separate policies for each of you – suggests the Money Saving Expert

Cons

  • if you hold a joint life policy but split from your spouse or partner later on, you are likely to have to cancel the joint policy and arrange two separate policies – when you are both older, potentially in less good health, and therefore at greater expense
  • a joint life policy pays out only once – when the first of the co-insureds die
  • if you have children, therefore, the policy benefits are shared between them and your surviving spouse or partner – separate life policies held by the two of you pay out twice.   

The pros and cons of joint life insurance compared with separate life insurance policies mean that you may want to consider carefully your own personal needs and circumstances – specifically, whether you have children and whether it may be possible to leave one member of the marriage or partnership unprotected by life cover.   

In order to help make up your mind, you are also likely to want to shop around, in order to compare the benefits and costs of joint life and single life insurance. When shopping around like this, you might want to draw on the expertise and experience which we have built up here at Over 50 Choices, so that you seal the appropriate deal to suit your needs and circumstances.     

Further reading: Guide to Life Cover  


Ashley Shepherd is an Over 50s Personal Finance Expert

ashley shepherd

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