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How does joint life insurance work
Joint life cover works much like standard life insurance. You choose how much you want to be covered for, and for how long. If you or your policy partner pass away during this time, your loved ones receive your cover amount as a cash pay-out.
There are two types of joint life cover to choose from:
First death policies pay out on the first policyholder death. The second policyholder will receive the pay-out to use however they want. But after that, the policy ends, and the survivor will no longer be covered. This means if they still want life insurance, they’ll have to take out a new policy.
These are a good choice for couples who share responsibility for the bills. The pay-out ensures that the survivor isn’t left struggling to make ends meet if their partner passes away.
These are ideal for couples who each earn enough to support themselves and their loved ones should their partner pass away. Here the pay-out is usually used to support their children if, tragically, both their parents were to pass away.
Single vs joint life insurance
Here’s a breakdown of the pros and cons of joint life insurance:
Pros of joint life insurance:
- They’re usually cheaper. Most joint policies will cost less than two separate life insurance policies
- No matter who dies, your loved ones will get a pay-out. As you’re both insured, you’ll know that whoever is left behind will be provided for. This isn’t the case with single life cover, where you’d each need a separate policy to get a pay-out.
- Having a single policy means one lot of admin, making it easier to keep track of what you’re covered for, when you need to pay, and how much your pay-out is.
Cons of joint life insurance:
- You only get one pay-out as joint policies only pay out once. If you take out two separate life insurance policies for you and your partner, your loved ones would get two pay-outs if you both died. You’d have to pay two, often pricier, premiums however.
- Separating could end your policy because to be covered, both policy holders have to share a single address. If you separated, you’d have to end your policy. Even if you were several years into the policy, you’d lose everything you’d paid in so far.
Joint policies are ideal if you’re in a stable relationship and want to make sure your partner, or children, are cared for if either of you pass away.
Single policies are good for ensuring your loved ones are financially secure whatever happens. If you and your partner both passed away, two pay-outs could pay off your mortgage and support your children for as long as they need to be supported. If you and your partner separated, you’d also be able to keep your policy going, meaning no lost premiums.
What our life insurance expert says
Joint policies can be a smart way to save on your life insurance. But some only pay out once, so think about whether they're right for you before signing up. It’ll cost you a little more, but the added peace of mind of two pay outs can often justify the cost.
Life insurance expert
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