Joint Life Insurance
Joint Life Insurance is where you take out a life insurance policy in joint names i.e. 2 people covered, rather than just taking a policy in a sole name.
A joint life insurance policy covers 2 people, and can be taken instead of (or as well as) taking an individual sole life insurance policy.
For instance, you could opt to take out a joint policy and also a single policy additionally to cover the event of the main bread winners death during the policy, as their death is likely to have a more significant impact on finances.
Types of Joint Life Insurance
Joint life, first death : This type of joint life insurance pays out a lump sum on the first death during the policy. Therefore, the survivor and their family receives the benefit of the policy.
Joint Life, second death : This type of joint life insurance pays out on the second death during the policy. This may be appropriate to pay for inheritance tax for instance.
How to decide whether to take out joint life insurance or 2 single life insurance policies ?
You can consider taking out 2 individual single life insurance policies rather than a joint life insurance policy.
2 single policies for £100,000 cover will pay out 2 x £100,000 if the insured party dies during the policy.
A joint life policy will usually only pay out once and then lapses.
So when deciding which is most appropriate, you should consider the cost of taking out 2 individual policies vrs the cost of taking out a joint life insurance policy. If the cost is not much different, then 2 single policies offer higher cover than a joint life policy, for the same sum insured.
Some additional options :
• You can opt to include Critical Illness Cover to a decreasing term life insurance policy. It will then pay out in the event that you are diagnosed with one of the specified critical illnesses covered by the policy, during the policy term.
• Waiver of Premium Benefit. You can pay a small amount extra (usually between 2% - 4% extra on top of your premium) for waiver of premium benefit. This benefit means that the insurer will waive the premium (i.e. you will not have to pay) in the event you are off work due to accident or illness. This means that your mortgage can remain protected, rather than the policy lapsing, in the event that you are off work due to accident or illness.
There are additional options applicable to some decreasing term life insurance that you should discuss with your EFS adviser.
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