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Joint life insurance policy - How it works

When taking out life insurance, one decision that may cross your mind is whether or not you should apply for single or joint life insurance. What you apply for will depend on you and your partner's circumstances at the time, but often a joint policy can work out cheaper in the long run and provide more coverage.

Joint life policy versus individual policies

A joint life insurance policy ensures two people together, as the term implies, whilst a single life insurance policy will insure both of you on an individual basis. A joint life insurance policy works on the same basic principle of a single life insurance policy, with set premiums paid each month and a lump sum payment in the event of death.

Usually, taking out a joint life insurance policy works out cheaper than insuring each other individually on a single policy. However, bare in mind that, if you take out a single policy the cost may be more but the cover will be double and the payout will also be double. An example would be both a husband and wife dying in a car crash will result in a payout for both individuals (say for their children) on an individual policy, but a joint policy would only result in one payment.

Other issues can arise during a joint life insurance policy, such as splitting up, other children coming onto the scene after a divorce or one partner refusing to pay premiums, which can null the agreement.

Types of joint life insurance

There are many different types of joint life insurance policies but the actual details will be dependent on your provider.

Some policies work on a 'first death' basis - that means when one partner dies, the other receives the payout but might not actually be fully insured (or insured at all) when they die.

Other policies will work on a joint 'second death' basis where both parties are covered, whether one dies before the other.

Who can you take out joint insurance policies with?

People who can take out a joint life insurance policy are:

  • married couples
  • couples in a civil partnership
  • couples co-habiting who have joint financial obligations
  • business partners in some circumstances (if you are both completely obliged equally for the business)

The policy you take out will depend entirely on the company you shop with; it's important to search around and look for the best quote available in any instance.

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