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Should you buy a single or a joint life policy?
Should you buy a single or a joint life policy?

If you and your partner are looking into life insurance, the big question you need to answer is whether to go for a single or joint policy.

Here’s a simple guide that explores the differences between single and joint life insurance to help you decide – starting with a quick recap of what life insurance is and how it works

How does life insurance work?

Most people take out life insurance for a set period of time. For example, this could be for the duration of your mortgage, until your children finish their education, or until the age you expect to retire.

You choose the length of your policy when you apply. You also choose whether you want decreasing term or level term cover.

Decreasing term life insurance is usually taken out to cover a repayment mortgage. This type of cover tends to be cheaper because the payout shrinks in line with the amount you owe on your mortgage.

Level term cover stays the same throughout the duration of the policy so can be used to cover a mortgage as well as other living costs, such as childcare, your children’s education – or even family holidays.

Whichever type of life insurance you choose, the amount you pay each month will depend on your age, health, lifestyle and the level of cover you’d like. You’ll be asked about these when you apply.

What is joint life insurance?

A joint life insurance policy covers two lives, so it pays out if either person dies during the length of the policy. The payout automatically goes to the other policy holder. Both partners are insured for the same amount so the payout is the same whoever dies.

The key thing to remember about a joint life policy is it pays out only once – usually when the first partner dies. After this, the policy automatically ends, leaving the surviving partner uninsured.

You don’t have to be married to take joint cover – any two people can take out a joint policy to protect each other financially. It involves one application and just one monthly payment.

What is single life insurance?

As the name suggests, a single life insurance policy covers one person and pays out if that person dies during the length of the policy. The policyholder needs to choose the amount and who they want the payout to go to.

You and your partner can each hold single policies. That way, if one of you dies, the surviving partner still has their own policy. And you can select different amounts on each policy, so you can tailor it to your individual needs.

Which is the best life insurance for couples?

This will depend entirely on your circumstances. But here are a few factors that can help you decide:

What kind of cover do you need?

The most important consideration is whether you would need one payout or two.

If you don’t have any dependants, a joint policy could make sense. One payout for your partner would be enough as there’s no-one else for a second payout to go to.

Yet if you have children, a joint policy may not provide the protection you need. Remember that a joint policy only pays out on the death of the first policyholder – at which point the policy ends.

This means the surviving partner might need to take out another policy to protect the children. However, as they are likely to be older, this could make the cost of buying a new single policy significantly more expensive.

Another consideration is the amount of cover each partner needs. Taking out separate policies allows you to select different amounts of cover. Whereas with a joint policy, both policyholders would receive the same level of cover.

What’s your budget?

A joint policy is generally cheaper than taking out two separate policies for the same level of cover. So if you’re on a tight budget, a joint policy may be more affordable.

But think about whether the surviving partner would need to take out individual cover later in life. Because while a joint policy may be cheaper than two single policies initially, a joint policy plus an individual policy taken out when the surviving partner is older could be costly.

Surprisingly, the cost difference between buying a joint policy and 2 separate policies can often be quite small. So it’s worth getting quotes for both options.

If there's not much in it, you may prefer the extra protection that separate policies can offer. Remember that 2 single policies offer 2 payouts – so you’d be getting twice the cover.

Do you both need life insurance?

If your family has 2 breadwinners, you’ll probably want to consider insuring both lives.

But that doesn’t mean that a stay-at-home mum or dad shouldn’t also be insured. The work they do in bringing up children and looking after the home has a considerable value.

If the stay-at-home parent died, the surviving partner could face a significant financial burden. They might have to work less, or pay for extra help with the children and running the home.

So if you’re in a 2-parent family – regardless of how much you earn – it’s important for you both to consider taking out life insurance. Because it would make life a lot more comfortable if either of you had to face the future alone.

Do you want flexibility for the future?

If you’re looking for flexibility, you might prefer to take 2 single life insurance policies. They would be independent from each other so you could each increase or decrease your individual covers as your circumstances change. Another consideration is that if your relationship was to end, your cover would be unaffected.

If you take a joint policy, you would always both be insured for the same amount. And if you and your partner were to separate, your insurer may not be able to split your cover into 2 single policies. This would mean you’d need to cancel the joint policy and take out individual policies to protect any children you may have. As you will be older – and potentially less healthy – this could prove costly.

Explore your options

At HSBC, we offer both single and joint life insurance online. Plus, when you start your quote, you can use our calculator to help you work out how much cover you might need.

And if you’re not sure what kind of cover is right for you and your partner, our financial advisers offer fee-free protection advice. They’ll spend time getting to know your situation before recommending a policy and level of cover that's right for you.