Single Policy vs Joint Life Insurance Cover

What's the difference between 'single' and 'joint' life insurance?

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We take you through the pros and cons of single and joint life insurance.

Life insurance can give you the precious peace of mind of knowing that any dependents will be financially secure in the event of your death.

But if you are in a couple or partnership, should you opt for a ‘single’ or ‘joint’ policy?

If you are in a relationship it might seem obvious to take out a joint policy, but this is not necessarily the best option. So here’s a look at the pros and cons of both single and joint policies.

A single policy or separate plans?

Before deciding whether a single or a joint policy is right for your situation, it’s important to understand the differences between these two kinds of plan. 

If you opt for joint life cover, for example, then you and a partner will be protected by a single plan on the same terms and conditions. But if you take out two policies, these will be entirely separate. That means, if a claim is made on one, it will have no impact on the other. 


Before deciding whether a single or a joint policy is right for your situation, it’s important to understand the differences between these two kinds of plan.


Possible issues with joint cover

If you opt for a joint policy, it’s important to remember there will only be one pay-out. 

So, if a married couple had a joint policy, and both died in a car accident, their dependents would only receive one lump sum payment from the policy. If, however, the same couple had taken out individual policies, each one would make a pay-out. 

Another potential downside of a joint policy is if a relationship breaks down: you can’t simply ‘split’ the policy. That means if one ex-partner decides they don’t want to pay their share of the premium, the policy would probably cease unless the other partner took on the full burden of paying.

With life insurance policies, if premiums aren’t paid, then simply the policy terminates. 

There could also be issues over who is entitled to any pay-out from a joint policy, particularly if one of the former partners remarries and has children with their new spouse.

Having separate policies avoids this sort of issue. If a relationship does end, each partner has their own cover and can protect their dependents as they choose.

The importance of writing your policy ‘in trust’

Writing your life insurance policy ‘in trust’ simply means you are protecting any pay-out from the tax man – any payment on death will fall outside of your estate for inheritance tax purpose.

Current inheritance tax rules state that, if the value of your estate on your death is above £325,000 (if you’re single or divorced) or £650,000 (if you’re married or widowed), then everything you own above this threshold will be liable to inheritance tax at 40%.

That includes your home, any savings, valuables, and any life insurance payout that hasn’t been written in trust.

So, if for example, your estate is valued at £425,000, your inheritance tax bill will be £40,000, which is 40% of the £100,000 above the £325,000 threshold.

Having your life cover written in trust also means the executors of your Will won’t have to apply for a grant of probate before the policy will pay out, which can take several months. 

The importance of comparing quotes

Whether you opt for a single or joint policy, it’s essential to compare life insurance quotes from lots of different providers to ensure you find the most competitive deal possible. Premiums can vary widely depending on who you go to, so always do plenty of research before buying.

Finally, remember that although two separate policies will provide you with greater cover overall, if premiums aren’t affordable, having a joint policy is much better than not having life insurance at all. 

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