Joint vs single life insurance: which is best?

What is joint life insurance?

Joint life insurance is a policy taken out by two people, typically a couple, that pays out upon the death of the first policyholder during the term.  

After the payout, the policy ends and doesn't cover the surviving partner. You can have joint policies for all the different types of term insurance - find out more about the best life insurance policies. 

A couple might have a joint decreasing term policy to cover their mortgage and a joint level or increasing term policy to ensure a lump sum for family support if one parent dies.

Some joint life insurance policies include a terminal illness clause, allowing for a payout if one policyholder is diagnosed with a terminal illness and given less than 12 months to live. This allows you to put your affairs in order. You do not have to pay any back if you outlive the doctors’ expectations.

• Find out more: Can I have two life insurance policies?

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Why get joint life insurance?

Couples and friends often get life insurance when they have commitments together, such as family or a mortgage. 

Life insurance pays out if the insured person dies while the insurance is in place. There are two main types of life insurance:  

1. Whole-of-life cover pays out an agreed amount whenever you die, providing you have continued paying the premium (some policies stop taking money when you reach 90)
2. Term insurance covers you only for a fixed number of years (the term).

You can receive a lump sum or get a monthly payment – called family income cover. 

We examine how joint life insurance works and whether a joint policy or two single life insurance policies might be best.

Read up on what are the different types of life insurance?

What are the disadvantages of joint life insurance?

The main disadvantage of joint life insurance is that you will get only the single payment per policy, even if the worst were to happen and both of you died during the term of the policy.

If you had two single policies, the insurer would pay out on both. With all other risks the same, the discount for a joint policy is often small.

If you get quotes for single policies and a joint policy and the difference is marginal, it might be worth considering single policies. 

If the worst-case scenario happened and you were both killed in car crash, for example, your family would receive twice as much money from two single policies than from a joint policy.

It's also worth considering that not all relationships last the test of time. Splits happen among unmarried couples, too. 

With single life insurance, each person could carry on paying their own policy and move on.

• Find out more: accidental death cover and insurance explained

Not twice the value

Dean Sobers, Which? insurance expert says:

'If you’re married or live with a partner, you might consider buying a joint life insurance policy to cover you both. These come with their perks - the chief one being they’re often (slightly) cheaper than buying two individual policies. They also make for less paperwork, and will pay out the same amount should either partner die.

But don’t assume they represent twice the value. In fact, the reverse is closer to being true. Most joint policies will only pay out once, which means you’re effectively sharing - rather than combining - cover. If the surviving partner wants to continue being covered, they’ll need to reapply for a new policy.

So before taking out joint cover, it’s worth checking how much of a saving this would actually make over both of you buying separate insurance. If the gap isn’t that big, this may be the better option.'

What is single life insurance?

Single person life insurance covers just the individual insured. It will pay out on your death or, often, if you receive a diagnosis that you have a terminal illness and will die within 12 months. 

The premium is calculated based on three factors:

1. Your age – the older you are when you take out the insurance, the more expensive the premium
2. Your health – you must tell the insurer of any pre-existing medical conditions or health problems and these may increase the premium
3. Your lifestyle – if you drink heavily, smoke, take recreational drugs or do dangerous activities, your premium will be higher.

You can also set up your life insurance in trust, which ensures it is not added to the value of your estate and subject to inheritance tax. This may also grant access to the funds faster.

• Find out more: income protection insurance explained

Joint vs single life insurance: which is better?

Imagine a couple with a mortgage and children took out decreasing life insurance to cover the mortgage and level term life insurance for a further £250,000. 

Then imagine both were killed in a car crash when the mortgage still had £250,000 owing. Here's how the payouts compare:

Joint life insurance policy

• Joint decreasing term life insurance: £250,000
• Joint level term life insurance: £250,000
• Total: £500,000

The mortgage would be paid off and the children would get £250,000.

Two single life insurance policies

• Single decreasing term life insurance (person 1): £250,000
• Single decreasing term life insurance (person 2): £250,000
• Single level term life insurance (person 1): £250,000
• Single level term life insurance (person 2): £250,000
• Total payout: £1m

The mortgage would be paid off and the children would get £750,000.

• Find out more: Do I need life insurance for a mortgage?

Is joint life insurance cheaper?

In March 2023, LifeSearch ran some quotes based on a couple, both 32 years old, both non-smokers, looking at level cover paying out £250,000 over a 25-year term. 

• A joint life policy, paying out a maximum of £250,000, attracted a monthly premium of £18.88. 
• Two single life policies for £250,000 each, paying out a maximum of £500,000, attracted a total monthly premium of £19.42. 

That means that for an extra 54p a month, a family would receive an extra £250,000 if both parents died. You pay less than 3% extra to get 100% more potential benefit.

Each individual and couple would need to look at the costs and benefits of joint or single life insurance policies and decide which was best for them in their specific circumstances. But this is a major life decision, so it may be prudent to seek professional advice.

• Find out more: Best life insurance for over 50s: how to get the right policy

What happens to joint life insurance after divorce?

After a divorce, joint life insurance policies usually need to be cancelled because they are designed for policyholders living at the same address.

Some insurers allow you to split a joint policy into individual ones with the ‘separation benefit’, but this usually isn’t included in a policy. Check with your insurer to confirm this. 

One option is that you let one person take over the joint life insurance policy. In this case, both must agree, contact the insurer, and sign a legal document. The person taking over will pay the premiums and choose the beneficiaries. If you have kids, put the policy in trust to avoid legal issues. The other person needs to get a new policy.

Or, you can cancel the joint policy and each get your own. Some insurers need both to agree to cancel, so check first. Cancelling without telling your ex-wife or husband can leave them uninsured.

Make sure new policies are in place before cancelling the joint one. It’s worth comparing new quotes since premiums might be higher if you’re older or have health issues.

Can I get joint life insurance if I’m not married?

Yes, you can get joint life insurance even if you’re not married. 

Many insurers offer joint policies for couples who live together or are in a civil partnership. This type of policy covers both people under one plan, providing financial protection regardless of marital status. 

Check with the insurer for any specific requirements.

What else do I need to consider? 

If you're looking to buy joint life insurance, keep the following in mind:

• Coverage type: decide if you want first-to-die or second-to-die (survivorship life insurance) coverage. First-to-die pays out on the first death, while second-to-die pays out after both policyholders pass away.
• Premiums: understand how premiums are calculated and if they fit your budget. Joint policies can sometimes be more affordable than two separate policies.
• Beneficiaries: determine who will receive the payout. If you have children, consider setting up a trust to manage the funds.
• Policy terms: review the terms and conditions carefully, including how to handle changes like separation or divorce.
• Flexibility: check if the policy allows for splitting into individual policies if needed in the future.
• Provider reputation: research the insurer’s reputation and customer service to ensure they are reliable. You can check out our list of the best life insurance providers. 

What is the difference between joint life and dual life?

There is a slightly different policy called dual life insurance, sometimes called joint life second death insurance, which pays out only if and when the second person dies during the term of the policy. 

Dual life insurance policies are usually reserved for people using life insurance to cover a large inheritance tax bill.

It pays out when both people have died and the payout is usually used to cover inheritance tax paid on the estate as it passed on to family members or friends.

What is joint term life insurance?

There are many different options with term insurance:

1. Decreasing term life insurance is usually tied to a debt, such as a repayment mortgage. This way the amount paid out if you die during the term reduces as your monthly repayments reduce the total amount owed.
2. Level term life insurance pays out an agreed fixed amount if you die during the term.
3. Increasing term annually raises the amount paid out if you die during the term, usually in line with a measure of inflation (CPI or RPI).

• Find out more: life insurance with diabetes explained

Combined joint life insurance and critical illness cover

Joint and single life insurance policies may have critical illness cover (CIC) added to them, or you can buy critical illness cover as a standalone policy. 

CIC pays out if you are diagnosed with one of a list of 100 or more diseases or conditions. Different insurers take different views on the severity required before payments are made. You may be best off seeking expert advice.

A combined life and critical illness policy will also reduce the final amount paid out on death if money has already been paid for critical illness. 

Separate policies would leave the amount paid out on death unaffected.

• Find out more: life insurance with cancer