Couples often share financial products: mortgages, bank accounts and credit or debit cards, for example. It can be both simpler and more economical to do this and, in some cases, it’s essential. Similarly, it may be a good idea for a couple to combine their life cover by taking out a joint life insurance policy.
An explanation of joint life insurance
An important feature to be aware of is that there can only be one claim, against either the first death or the second death, depending on your agreement. This means:
- If the policy pays out for the first death, the surviving partner will have funds to cover funeral costs and the loss of an income from the household, but they would be without cover unless they took or had already taken out a separate policy.
- A second-death joint insurance policy would not pay out until both parties had died, providing the benefit to any dependents of the couple but making it necessary to find the means to pay for the first funeral.
- The amount of coverage for a joint policy is lower than two separate policies would be.
- If both parties were to die at once, the payout would not reflect the loss of two incomes.
- If the second party were to die shortly after a first-death claim, they may not have had an opportunity to put their own insurance in place.
It’s also worth noting that the cover may become void if the insured couple later separates, unless provision has been made to allow the policy to be split, which is not the default case.
None of this renders the principle completely unattractive; a combined cover policy provides insurance for both named parties and will cost less than two single policies. It can be particularly useful when one partner suffers from a condition that might make single insurance difficult or costly to obtain. The terms and conditions are identical for both partners, regardless of any differences in their medical histories and the same amount will be paid out upon death, no matter which partner’s death triggers it.
Who can take out this cover?
Joint life policies can be purchased by any pair of people who have a legitimate and provable reason to need cover against one another’s death. In effect, any official partnership, including marriage, civil union, cohabitation or even a business relationship, would allow such a policy to be initiated. The key requirement is for them to demonstrate some shared accountability for properties, resources or finances.
Just as with any product, there are some which are more appropriate for your circumstances. The insurance industry recognises that this is particularly important when it comes to financial health and offers a comprehensive range of products to cover as many of their customers’ requirements as possible. By working with your provider, you can discover whether joint life insurance is the right solution for you and those who depend on you.