With lower premiums and the simplicity of a single contract, joint life cover can represent the best option for couples looking to protect a mortgage or provide for their family.
But while it might be cheaper, it may not offer the best value, especially if either person’s circumstances change in the future.
Although arranging joint life policies for couples has become the norm, Eric Purdy, an independent underwriting and claims consultant, is keen to see the market move away from this.
“If you look at the pricing, the saving for a joint life policy compared with two single life policies is minimal. All you are really saving is the second policy fee,” he explains.
“This means you are effectively paying for half the cover.”
Number crunching
Premium examples from Royal London demonstrate this, as Table 1 shows. A £250,000 25-year joint life policy for a non-smoking couple aged 30 would cost £16.40 a month.
Table 1: Cost of single/joint life protection
| Age | Term (years) | Benefit | Life | Premium |
| 30 | 25 | Death | Single | £9.95 |
| 30 | 25 | Death | Joint | £16.40 |
| 30 | 25 | Death/CI | Single | £58.97 |
| 30 | 25 | Death/CI | Joint | £107.46 |
| 40 | 25 | Death | Single | £19.87 |
| 40 | 25 | Death | Joint | £35.06 |
| 40 | 25 | Death/CI | Single | £120.32 |
| 40 | 25 | Death/CI | Joint | £221.56 |
Notes: Based on a non-smoker, sum assured of £250,000, no TPD nor child CIC. Rates from 6 February 2018.
Source: Royal London. Copyright: Money Management
In comparison, two single policies would cost the couple £9.95 a month each, which means they would only be paying an additional £3.50 a month for double the cover. Over the course of the policy this equates to an extra £1,050 for a potential total payout of £500,000.
As well as providing double the cover, two single life policies also offer greater future proofing. If the couple separated at a later date, they would each have their own life cover, saving the hassle of either splitting the policy or starting afresh.
Although many life policies sold in the adviser market include separation options, allowing each person to walk away with a single life policy based on the sum insured and underwriting information they provided at the outset, this is not always available.
Actioning it can also add complication, as Jennifer Gilchrist, senior product development manager at Royal London, explains: “Most policies include some flexibility in the event of separation, but it is down to the insurer’s terms and conditions. You also need the other person to agree to separate the policy, which may not always be possible.”
In some situations, an insurer’s terms and conditions may be restrictive. For example, where a policy is linked to a mortgage, an insurer may require evidence of a new mortgage before they will split the cover.
Future-proofing
Where a separation option is not available, keeping a joint life policy with an estranged partner can cause further complications. Andrew Gilbert, head of life products at LV=, says: “If both parties remarry and have more children, there will be a challenge regarding who is entitled to receive the proceeds of the claim.”
While there may be a solution in the event of a separation, this is not an option when one person dies. Although the debt will be cleared as a result of the claim, the survivor would need to start afresh if they wanted to take out cover to protect any dependants.
