For many couples, there comes a time when you need to start planning for your future together. Whether you’re married or in a long-term relationship, life insurance is a key consideration in case anything were to happen to one of you. Without it, you or your partner could face significant financial burdens in the others’ absence.

Although life insurance is usually purchased individually, it can also be bought as a joint policy. In this article, we’ll look at how joint life insurance works, and what you need to consider when taking out cover. 

What is joint life insurance?

As the name would suggest, joint life insurance is a type of policy which provides cover for both you and your partner in one policy. Instead of taking out separate policies, with joint cover, you only pay one set of premiums to keep the policy active.

Many couples find this option easier to manage and potentially cheaper than taking out individual policies. Just like a regular life insurance policy, it pays out a lump sum to you or your partner depending on who dies first. They can then use this money to replace any lost income or cover any financial obligations that may arise in the event of a death.

1. Choose your policy type

There are two main types of life insurance cover to choose from:

• Whole life insurance (also known as ‘life assurance‘) – which covers you for the rest of your life. The policy pays out a cash lump sum regardless of when you or your partner dies, so long as your premiums are paid. Both the cover amount and premium cost will remain fixed during the policy.
• Term life insurance – which covers you for a specified amount of time (usually between 5-50 years). If you or your partner die during the policy term, the surviving partner will receive a payout. However, if you outlive the term, the policy expires and the surviving partner will not receive a payout. Term cover is often cheap as the policy is not permanent, nor is a payout guaranteed.

The type of policy you need should depend on your circumstances. For example, if you want cover for the long haul, with a payout virtually guaranteed, then whole cover will likely be your preferred choice.

Whereas if you only wish to have cover for a certain timeframe, such as until your children have grown or until retirement, then term cover may be more suitable.

2. Choose how you want the policy to payout

Unlike a standard policy, joint life insurance allows you to choose how the payout is issued in the event of one partner’s death. There are generally two options for payouts with joint life insurance:

• First Death Policy: This type of policy pays out a lump sum to the surviving partner upon a death in the couple. After this payout, the policy ends, meaning there is no further cover for the surviving partner.
• Second Death Policy: This option pays out a lump sum only after both partners have passed away. This type of policy is often used for estate planning purposes, as it can provide funds to cover funeral expenses, settle debts, or ensure your children receive a financial inheritance.

First death is typically the more common option for couples seeking immediate financial protection, as it provides a payout upon the death of one partner. As such, it can help cover expenses such as lost income and ongoing bills. However, after the first payout, the policy ends, and the surviving partner will need to take out further cover if needed.

On the other hand, a second death policy may be preferable for couples who are concerned about long-term financial planning and want to ensure their loved ones are taken care of after both partners have passed away.

3. Decide how much cover you need

Often the trickiest part of buying a life insurance policy is determining the appropriate amount of coverage. The ideal cover amount will often depend on several factors, including your financial situation, income levels, debts, and future obligations.

Mainly, you need to ask yourself why you need life insurance, which could be for a number of reasons such as:

• Income replacement
• Covering debts (like a mortgage or loans)
• Funding children’s education
• General financial security for your family
• Retirement planning
• Legacy planning (such as an inheritance for your children or grandchildren)

A good starting point is to calculate your current annual income and multiply it by the number of years you want to provide support for your dependants. You can also factor in any outstanding debts or financial obligations that need to be covered.

It’s also wise to review your cover needs over time, especially after significant life events like marriage, the birth of a child, or changes in your income.

4. Get a quote

Once you have determined the type of policy that best suits your needs and how much cover you require, the next step is to get a quote. This is essentially an estimate of the premiums you’ll need to pay for your chosen policy.

Typically, insurers will ask for the following information to provide a quote:

• You and your partner’s age
• Health
• Occupation
• Cover amount needed
• Duration of coverage (if applicable)

Once you’ve provided this information, the insurer will calculate the risk associated with insuring you and provide a premium based on that assessment. Make sure to speak to different insurers for a deep comparison.

5. Apply online

Applying online for life insurance has become increasingly convenient, allowing you to manage your application from the comfort of your home.

To begin, visit the insurer’s website where you intend to apply. Be prepared to provide personal information, including your and your partner’s details, health history, and any other relevant info.

Once you submit your application, the insurer will review the information provided. They may request additional documentation or a medical exam, depending on the cover amount and their underwriting guidelines.

After your policy is approved, you should receive confirmation of your coverage and details regarding your premium payments.  Read through any policy documents carefully to understand the terms, conditions, and exclusions that may apply.

We’re very proud to bring you this feature in association with Cavendish Online. For more features, please pay a visit to our lifestyle page.