Think twice before buying joint life cover online

Think twice before buying joint life cover online October 28, 2009

Posted by admin in : Buying Life Cover, Life Insurance Tips , trackback

When buying life cover online, many people make the mistake of just comparing price. Cost is of course an important consideration, but if you’re choosing between joint life and separate individual policies, the least expensive option can sometimes prove unsuitable in the long run.

Joint life insurance is cheaper, but…

Many couples take out joint life insurance to cover mortgages or to provide financial protection for their children if one partner should die or become critically ill.

However, by trying to save a few pounds with a joint policy rather than two separate ones, you have to settle for cover that offers just one pay out leaving a surviving spouse uninsured.

On the surface, the cheaper joint life option may seem more attractive for a young couple with children, a mortgage and a tight budget. If one partner dies, the surviving partner can use the insurance pay out to cover the mortgage, thereby providing the family with some security. The down side is that the partner who is left behind is then uninsured and unprotected, because the policy terminates after a single pay out. If this occurs fifteen or twenty years after the policy was first purchased, the surviving spouse may be in their forties, possibly even in poor health, making it harder and more expensive to buy new cover.

Another disadvantage with a joint policy is that while it works well enough to pay off a mortgage or other debt, it’s not an ideal method of replacing the lost income of the deceased partner. This tends to be a problem because each partner will most likely have a different level of income, and because a joint life policy insures each partner for the same amount, it cannot account for the varying levels of protection each may require.

The practical solution

The most practical solution for all of these problems is to purchase two separate policies. This may be slightly more expensive than joint cover, but in the long term, there are several advantages.

Most importantly, you are covered with twice as much insurance protection.
If one of the policyholders dies, the surviving partner is still covered.
If a couple is married and later separate, dividing up the insurance is a simple matter. It’s impossible to divide a joint policy between two separating partners unless a separation option is included in the policy.

Overall, buying two separate life cover policies does cost more, but in the long term the advantages more than pay for it. Given that buying two separate policies can be only marginally more expensive than joint cover, it can be more practical and prove better value for money.

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