Life insurance is cover you take out for a set number of years. You agree the term of the policy at the outset, usually between 10 and 25 years. That’s why you’ll often find this type of policy referred to as term insurance. Most people tailor their policy to ensure that their financial commitments would be met in the event of their death, so policies are often aligned with the term of a mortgage or other loan. Families often opt for life insurance to cover them whilst the children are growing up, taking a policy that will end when they become financially independent. With life insurance, you aren’t guaranteed to receive a payout as you could outlive the term of the policy. However, what you do get is the continuing peace of mind and the guarantees that protection policies give you and your family.
One policy or two?
Couples have a lot of things in common, and that can include financial commitments like bank accounts and mortgages. However, when it comes to life insurance it can make sense for each partner to have their own separate policy. A ‘single’ life policy provides cover for that person only, and pays out the amount of cover provided under the policy if the insured person dies during the policy term. By contrast, a ‘joint’ policy covers two lives, normally on what’s referred to as a ‘first death’ basis. This means that the policy pays out if during its term one of the policyholders dies. As the policy is designed to payout only once, it will come to an end. So, in this case, the surviving partner would no longer have any life cover under this policy. If instead each had their own policy, the survivor would still have life cover in place.
Joint Policies and Divorce
It’s also important to consider what might happen if there was a joint policy in place and the relationship breaks down. There may be options available to you, such as keeping the policy as it is, splitting the policy (although many providers do not allow this) or cancelling the current policy and taking out new single life policies. However, this will all depend on individual circumstances and needs and we recommend you seek financial advice.
The right cover for both of you
Whilst one joint policy could be more affordable than two single policies, depending on personal circumstances, it makes sense to think about each partner’s life cover needs separately. With many families these days reliant on two incomes, it can make financial sense for each partner to have their own policy in place. That way, they can each tailor the amount of cover and the length of the term to their own specific needs. This can be particularly relevant if you and your partner are different ages and in different states of health.
We also offer superior cover to other more popular sites and by going direct.
Your adviser can you take you through your circumstances in greater detail and suggest a package to suit your circumstances.