Joint vs single life insurance: which is best for you?

What is joint life insurance?

Joint life insurance is when two people take out life insurance together, and the policy pays out if and when the first of the couple dies during the policy term. 

The policy then ends – it doesn't pay out if the second person dies soon after.

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 provide a lump sum to look after the family if one parent dies.

If your life insurance has a terminal illness clause, you will receive the payout if you are 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?

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.

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Read up on what life insurance should I get?

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

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: is it worth getting income protection insurance?

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.

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.