Joint vs. separate life insurance policies

Learn about the differences between joint and single life insurance policies, and find out which could be best for you and your family.

What is a joint life insurance policy?

It’s not a subject people like to think about, but would your family be able to cope financially if you or your partner were to pass away? Many people choose to take out a life insurance policy to cover their mortgage payments or to make sure any dependents are provided for if the worst should happen.

For those with a shared financial interest — such as a joint mortgage or parental responsibilities — a joint life insurance policy could be an option, meaning two people are insured on one policy. There's only one monthly premium to pay, and the policy will pay out in the event of either policyholder’s death.

This approach can make financial sense for many couples, as the monthly cost is typically low and it’s easy to set up and manage one policy. Although joint life insurance policies are popular with couples, policies are often available for any two people who have a financial bond.

How do joint and single policies differ?

Joint life insurance

It's important to understand that joint life insurance policies usually only pay out for the first death. Once one partner has passed away, the remaining person on the policy is no longer covered. If the surviving policyholder still wishes to be covered, they will need to take out a new policy.

If many years have passed since the start of the joint policy, the surviving policyholder will likely find that the cost of life insurance has increased due to their age or if they have had any health problems since they took out their joint policy.

In the unlikely event that both policyholders die at the same time, there would only be one payout to the beneficiaries. If you decide to take out a joint policy and have young dependents or a large mortgage, you should carefully consider the financial impact this would cause and make sure you take out enough insurance for a worst case scenario.

Single life insurance

Although joint life cover may be the best option for many couples, taking out two separate life insurance policies can offer more flexibility and ensure that your beneficiaries receive a payout for each death.

Separate policies allow you to insure each person for a different amount if required — you may wish to take out a higher level of insurance for the family’s highest earner, as their death would be more likely to cause a major financial impact. The lower earner can then take out a separate policy for a smaller sum, which will likely result in a smaller monthly premium.

It’s important to ensure both partners are covered, because the family income would still be impacted if the lower/non-earner passed away — consider the additional cost of childcare or the resulting change in working arrangements for other members of the family.

Separate policies can also be beneficial for partners where one person has some other form of existing life insurance cover, for example if they receive a death in service benefit at work. They may choose to ‘top up’ their existing cover if required, while the other partner can insure themselves for a larger amount.

Joint vs. single life insurance: Which is better?

The best type of life insurance cover will depend on your circumstances — many people will find that a joint life insurance policy is the best option for them because the monthly premiums are typically low and it’s easy to manage one policy.

Some couples may choose to take out a joint policy if they are relatively young and it’s unlikely both policyholders will pass away, so the survivor could take out another policy later on if needed.

However, others will appreciate the flexibility and added protection of taking out two separate life insurance policies.

For many, the price difference between the two policies will be a deciding factor. Because two separate policies offer more cover this will often be a more expensive approach — but the price difference can be minimal and make the difference between financial problems and a secure future for your dependents.

*Based on £150,000 of level-term cover for 25 years for a 30-year-old non-smoking male with no pre-existing medical conditions (March 2023)

The life insurance comparison service is provided by Direct Life & Pension Services Ltd who are authorised and regulated by the Financial Conduct Authority (155312). Registered Office; Friars House, 52A East Street, Chichester, West Sussex PO21 2PJ. By using this system you are also agreeing to our Terms and Conditions and Privacy Policy

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