Did you know that you can get life insurance cover for two people? Joint life insurance is a great option for couples who are looking to protect their family when they eventually die. So how does it differ from regular life insurance policies?
What is Joint Life Insurance?
Joint life insurance is a type of life insurance policy that covers two people in the event of their death. Depending on the type of policy you have, the policy pays out a lump sum to the surviving partner.
Joint life cover is popular with couples as it can be easier to manage and cheaper than two single policies.
How does joint life insurance work?
Joint life insurance works as two types of cover – first death and second death.
First death policies payout after the first person within the couple dies. The policy then ends, meaning the surviving member would need to take out further cover if needed.
Second death policies only pay out once both people have died. In this case, if you and your partner died at the same time, (for example, in a car accident) the money would provide support for your children and their future.
Once you take out cover you are required to pay monthly premiums to your insurance provider. If you fail to keep up with these payments your insurer may cancel your policy in which you will no longer be covered.
Who needs Joint life insurance?
Some of the people who may need joint life insurance include:
- New parents
- Single parents
- Spouses
- Families with older children
- Long-term partners
- Business partners
Of course, if you are single with no children, it’s unlikely that you would need life insurance. However, that doesn’t mean you should rule out getting life cover completely as your circumstances may soon change.
Types of life insurance
Joint cover can be taken out for life insurance policies such as:
Whole life insurance – This provides cover for the whole of your life, meaning it has no expiry date. When you or your partner dies, the survivor receives a cash lump sum to support them with any finances they would otherwise struggle to pay.
With whole life cover, both your pay-out amount and premium costs are fixed throughout your policy.
Term life insurance – Unlike whole life insurance, term life cover protects you and your partner for a limited amount of time (i.e 20 years). Your family only receives a lump sum payout unless you or your partner dies within this time, if not the policy simply expires.
Term life insurance has 3 forms of cover:
Level term – Both your premiums and pay-out amount are fixed throughout the length of cover. This means your premiums remain the same even as you get older or develop health conditions.
Decreasing term – The pay-out decreases overtime, typically taken out alongside large payments like a mortgage. As you make repayments, money is deducted from your pay-out, so that when you die your family has enough money to pay off the remaining balance.
Increasing term – Your policy payout increases overtime to protect the eventual amount from inflation. However, because of this, your premiums also increase over time.
How much cover do I need?
The amount of cover you need depends on how much financial support is needed if you or your partner were to die. Naturally, you’d need to take out more cover if you are the main source of income, compared to if you and your partner share an income.
Among many things, life insurance can help you and your family with finances such as:
- Daily living costs
- Household bills
- Mortgage repayments
- Outstanding payments such as credit card debt
- Childcare costs
- Funeral expenses
In some cases, you may not need a joint policy, such as if you are the sole provider of your family’s income. In that case, it would make sense to get a single policy for yourself, instead of joint life cover.
So, now that you know how it works, get cover for you and your partner today!
