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Life insurance can be a great way to protect your loved ones in the event of death, and is designed to pay out a lump sum if you die during the policy term. The lump sum can be used to cover mortgage repayments, ongoing bills, funeral expenses, and much more.

However, if you’re married or in a long-term relationship, you may be thinking about a joint life insurance policy. In this guide we’ll explain the key differences between single and joint policies, highlighting the main benefits of each. This should help you make an informed decision on what could be the right type of policy for you.

This is a general description of the policy features widely available – you will want to ensure that any specific policy suits your needs and circumstances.

What is a single life insurance policy?

A single policy is for one person. You apply for life insurance and agree a premium to pay each month. This premium is fixed for the term of the policy, so it doesn’t increase with your age. If you die during the policy term the life insurance policy could pay out a lump sum.

  • Both partners can have their own single life insurance policy.
  • Each is completely separate, which could result in two individual payments when each policyholder dies.
  • Policy terms, premium rates, and lump sum payments may differ between the two policies.
  • If the relationship breaks down, each partner can continue paying for their own policy.
  • Two single policies may be more expensive than a joint policy, but this isn’t always the case.

It’s important to remember – when the first partner dies, the survived will still be covered by their own policy.

What is a joint life insurance policy?

As you would likely expect, a joint policy can be taken out by a couple – whereby they’re both covered with life insurance under the same terms. There will be one payment to make each month, which can often be cheaper than taking out two individual policies.

  • Under a joint policy, if a valid claim is made only one lump sum is paid, which will be agreed at the outset of the policy. This is normally in the event of the first partner dying during the policy term.
  • Once the payout has been made, the policy will come to an end.
  • The remaining partner will no longer be covered by a life insurance policy, and arranging a new one could be more expensive – depending on factors such as age and health.
  • If both partners die at the same time, only the agreed lump sum would be paid.

To find out how much a life insurance policy would cost, insurance providers allow you to obtain a no-obligation quote.

What are the differences between single and joint life insurance policies?

This table shows the key differences between a single and joint policy:

Single Policy

  • A single policy covers only one person.
  • If the person covered dies during the policy term, a lump sum is normally paid.
  • The surviving partner will still be covered by their own policy until its term ends.
  • If the relationship breaks down, both policyholders will still be covered by their own individual policies.

Joint Policy

  • A joint policy covers two people in a relationship.
  • If one of the people dies during the policy term, a lump sum would normally be paid and the policy will end.
  • The surviving partner will no longer have a life insurance policy.
  • If both partners die at the same time, only the agreed lump sum would be paid.
  • A joint policy can be cheaper than two singles.
  • If the relationship breaks down, the policyholders will need to check the terms and conditions of their policy to see what options are available.

Which is the best policy for you?

Choosing the best life insurance policy will depend on your own circumstances these could change over time. Everyone is different and so there is no ‘right’ policy. It’s simply a case of looking at the benefits and costs for each and understanding which better suits your needs.

There are a few things to think about though, which could make your decision a little easier:

  • Budget: Life insurance policies are priced differently for each policyholder – but typically, the younger you are, the cheaper premiums will be. Likewise, a joint policy will probably be cheaper than you and your partner taking separate ones, although the premium will typically be based on the older partner. If you’re trying to budget and have set bills, a joint option could be more feasible.
  • Level of cover: How much cover do you need? Do you have a joint mortgage which needs to be paid off? Do you have dependants who will rely on the money that could be paid out? With two single policies there could be two separate payouts, so for those left behind it could be financially better.
  • Thinking of the future: What happens if the relationship breaks down? Many relationships do come to an end, and applying for a new policy later in life can be much more expensive.

What to do when a relationship breaks down?

If you have a joint life insurance policy and your relationship breaks down, what will you need to do? If you no longer wish to hold a joint policy, it could be possible to change it into two single ones.

This means each partner has their own life insurance cover and can protect dependants as they choose.

Just bear in mind that, because premiums increase with age, reapplying for life insurance can turn out to be more expensive compared to what you had previously paid and as life insurance isn’t a savings or investment product, it will have no cash value unless a valid claim is made. Any changes in your medical history could also affect a new policy.

So, when you make the decision between single and joint life insurance, make sure you’ve considered all of the options and choose the cover that suits you best.

Good to know

Direct Line’s Life Insurance is provided by Legal & General