Joint term life insurance
A joint term life insurance policy provides insurance cover for two people, often a married couple, for a predetermined period of time (the 'term').
What is term life insurance?
Term life insurance provides cover for a fixed period of time, often 10, 15, or 20 years. If you die during the fixed period, your beneficiaries will receive a lump sum payout. If you survive the fixed period your beneficiaries won't receive anything, unless you take out another life insurance policy later on.
Term life insurance can work for people who want to be covered for a specific period of time, for example the term of a mortgage or the period when children are still living at home. If you want to cover a mortgage debt, you could consider mortgage life insurance (otherwise known as decreasing term life insurance) where the payout and premiums decrease over time as you pay the mortgage off.
How joint term life insurance works
A joint term life insurance policy covers you and your partner, and will pay out if one of you dies during the fixed term. The policy will then be terminated, so there will be no payout on the death of the second partner.
This type of policy may be suitable for couples who want to make sure that if one of partner dies, the surviving partner will still be able to pay the mortgage.
Advantages of joint term life insurance
- It is usually cheaper than purchasing two separate policies, as there is only one potential payout.
- There is only one policy number to remember and only one set of terms and conditions to read.
- You have the security of knowing that your partner will be able to cope financially if you die during the term.
Disadvantages of joint term life insurance
- This type of policy only pays out for the first partner's death. If, for example, you and your partner both died in a car accident, your beneficiaries would only receive one payout.
- If your relationship ends you can't 'split' the policy. If one partner stops paying their share of the premiums the policy will cease unless the other partner covers that share as well as their own.
- If both partners survive the term the policy won't pay out, and you won't get any money back.
Last death joint term life insurance
You may also be able to set up your joint term life insurance policy so that, rather than paying out on the death of the first partner, the policy will pay out only after the second partner dies. This could be an attractive option if you and your partner have children together and want to leave the insurance payout in trust to them, if both of you should die while they are still young.
However, this type of policy would still only pay out if both you and your partner died during the term.
Alternatives to joint term life insurance
If you want a joint policy that pays out on the death of one partner, whenever that may be, consider a joint whole-of-life policy. This type of policy is usually more expensive than term life insurance, because a payout is guaranteed eventually.
If you only need cover for a fixed period of time but want more flexibility compare a joint policy to taking out two separate term life insurance policies.
How to get joint term life insurance
When you've worked out how much cover you need, compare providers to find the best deal for your circumstances. Our quote comparison tool lets you compare providers from across the market – protecting your loved ones could be cheaper than you think.
Last updated: 08 June 2015