Joint Term Life Insurance

Many in the UK life insurance industry believe that too many couples are opting for joint life assurance or insurance when they would be better off taking out two single-life policies. Indeed, independent company Lifesearch has gone so far as to suggest that many IFAs could be in breach of TCF (Treating Customers Fairly) guidelines by recommending poor value joint life policies ahead of their generally better value single life policies.

Although two single life plans will typically cost the same, or slightly higher than a joint life plan, the benefits significantly outweigh the extra cost. For example, with a joint-life policy in the case where an insured person dies, the policy ceases leaving the other person uninsured. This may occur later in life where getting reasonably priced insurance for the surviving party may prove very difficult or nigh on impossible, especially if they are in ill-health.

In addition, single life policies can be tailored to each life and the circumstances of the insured, whereas joint life plans have to be the same for both insured parties, and any payout made if both parties had single life cover would be double that in a joint-life claim.

Joint life insurance policies are most often used by spouses and business partners. It provides a type of coverage that is best suited to some kind of interdependent relationship, where if one of the key members or one of the partners dies the other(s) would be left out in the cold or up the river without a paddle sans the coverage.

There is a variation on this theme, however: there are joint life insurance policies that pay out on the second death, not the first. This type of joint life insurance policy might be used where two people who have high risk occupations have a similar interest in protecting the same people or assets. For instance, second-death life insurance policies can be used as trusts written in the name of a man and woman’s children. When the second parent dies the children will receive the money without having to go through probate court.

Many may wonder if it is better to use a joint life insurance policy with its higher premiums, or just buy two individual life insurance policies each for the same amount of coverage. The answer depends on the circumstances.

For one thing, a single joint life insurance policy might cost more than a policy that covers only one death, but two individual policies might add up to more than that one joint premium, too. Financial planners usually recommend a joint life insurance policy in business settings, therefore, as businesses must find every means possible of saving money.

Once you have decided that you need life insurance, the majority of people are not aware that in some cases it can be more beneficial for you to take out two single life plans rather than the joint life first death plan. The only other way to arrange cover for a couple and the main basis for this article is to arrange two plans one for each of you on a single life basis. This then results in, when one person dies the plan which is their pays out the sum assured. That said the surviving person still has their own life insurance running, because their plan is completely unaffected by the passing of their partner and their respective plan paying out.

Two single life insurance plans can also be of benefit over a joint life first death in the event that the relationship breaks down. It should be noted on this point that 4 in ten marriages do end in divorce and furthermore a higher figure than that of ordinary relationships do end in permanent separation. You do need to be aware that when this sort of thing happens assets and belongings need to be divided and split equally accordingly. Most if not all life insurance plans do not separate at all and as such need canceling and rewriting which can be an issue again if you are older and have had health issues. Two single life plans on the other hand do not need separating as they are by definition already two independent plans so can be taken away by their respective owners.

A lot of people assume that taking out two plans rather one joint is a lot more expensive and therefore unaffordable. This is far from the truth arranging two separate plans over one joint one can invariably only cost about 10% more on the overall premium. When you factor in the increase benefits already stated above an extra 10% is a small price to pay.

Joint life insurance enables two people to be covered under the same policy, saving them the hassle of having to pay 2 separate sets of premiums, maintaining receipts and remembering due dates etc. This is a very good way to insure life and is particularly beneficial for couples or business partners. As the chance of indemnifying the death claim in a joint policy is higher, so the premium is significantly more than what it would be in a single insurance.

If you compare a single life insurance with a joint one, the premium rates are high but definitely less that two separate policies combined. The critical illness clause ensures that the joint life insurance policy holders will be paid a lump sum in case of cancer, stroke or a heart attack, thereby securing their future after a serious illness.

If you set up a joint term life policy (one life insurance policy to cover two people) the amount you are insured for is paid out if either of you dies. The life insurance policy usually stops when a claim has been paid. You can’t cash in these life insurance policies.

Joint term life insurance policies are available, but many advisers will typically recommend two single life insurance policies as they usually cost hardly any extra and will provide double cover. This means that if both people die together, both policies pay out, rather than just one joint policy.

Policies that include critical illness cover are almost certainly better split into two separate life insurance plans. For example, if one person is diagnosed with an illness like cancer, their partner will not want their insurance to be lost, which would be the case on a joint term life, first claim policy. Having this double life insurance can provide valuable extra cover to support surviving family members for very little extra cost.