Life insurance for couples: is joint life insurance better?

Regardless of how money savvy you are as a couple, an unexpected turn of events resulting in you or your partner passing away or being diagnosed with a terminal illness is likely to be devastating – not just emotionally but perhaps financially too. This is where life insurance could help you to cover the expenses of such a life changing event.

Can you get life insurance as a couple?

You can typically get couples life insurance, known as a joint policy. This would cover both of you. Your other option would be to take out two separate policies for each individual.

Joint life insurance policy

Joint life insurance, sometimes referred to as ‘multi-life’ insurance, is where two people are insured under one policy. It’s usually taken out by two people with shared financial interests, such as spouses, partners or de facto partners. Under a joint policy, the sum insured amount for each partner can be different.

If one partner dies, the benefit amount will be paid to the surviving insured person. Some insurers may require you to nominate your partner as beneficiary for this to occur. The ownership of the policy will then typically go to the surviving partner and the policy will continue to operate as a single life insurance policy. In the event that one partner is diagnosed with a terminal illness, the benefit amount would be paid to both owners of the policy.

Single life insurance policy

In comparison, single life insurance only covers one person who is the sole owner of the policy. Couples taking out single life insurance policies can name each other as beneficiaries on their own respective policies, meaning your partner can still receive the benefit should you pass away. This also applies to any terminal illness benefit.

What does couples life insurance cover?

Couples life insurance is usually paid out in a lump-sum, which can be used to repay any personal debts or a mortgage, cover bills and provide for the needs of any children.

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Is it cheaper to have joint life insurance?

One of the potential benefits of having joint life insurance is that it may be cheaper than taking out two single policies. This is because some insurers offer joint policy discounts (on average around 5% off premiums). Another benefit is that it may be more convenient as you would only deal with one insurer and one policy.

What are the potential drawbacks of joint life insurance?

In terms of disadvantages, joint life insurance can get complicated if your relationship breaks down. While you can decide to keep the policy in place, cancel it or transfer it to one person, you will only be able to split the policy if both parties agree to do so.

If one partner refuses to split the policy, it will remain in place as long as premiums continue to be paid. This means that if one of the insured individuals dies, the benefit will still be paid to the surviving insured former partner. Additionally, if both partners agree to split the policy, any joint policy discounts are likely to no longer apply.

What are the pros and cons of single life insurance?

With single life insurance, the policy belongs solely to you and is not dependent on any relationship. This means that if your relationship does break down, it may be more straightforward to change your policy and remove your former partner as a beneficiary than it would be to deal with a joint policy.

In terms of price, two single life insurance policies may potentially be more expensive than a joint policy but this will depend on the insurer, the cover and your circumstances. Some insurers may offer discounts if you and your partner both buy life insurance policies at the same time. But if you were to buy a policy today and your partner bought a policy at a later date, you usually would not receive a discount.

Should I get single or joint life insurance?

Joint life insurance won’t be appropriate for all couples. Whether you should take out single or joint life insurance will depend on your individual circumstances and needs. There may be some instances where single life insurance may be more appropriate.

If only one partner has an income, this doesn’t necessarily mean you should only purchase one single policy. It’s worth keeping in mind the household contributions each partner makes and how much it would cost to pay for things like childcare if the partner responsible for this were to pass away.

If you’re weighing up single and joint life insurance, it could be a good idea to seek professional advice to confirm that the policy meets your individual needs. Additionally, keep in mind that many super funds offer life insurance to their members. So it might be worth considering what cover is available through your super fund (or what cover you may already have by default).

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