Reaching the decision that life insurance is the product you need to safeguard the financial future of your dependents upon your death is only half of the battle. The next factor for couples to consider is whether they will be better off with one policy or two.
When arranging your life insurance policy, it’s important to understand the differences between joint and single life policies. The right choice will not only ensure you and your partner receive the best value from a policy, but also that the benefits offered by the scheme are suited to your particular circumstances.
What are the potential problems of a joint policy?
In general, joint policies do not cost as much as two single policies, making them an attractive proposition for many. However, issues can arise if the worst should happen and both partners die in the same accident, as those dependents left behind will only benefit from a single payout. In contrast, separate life insurance cover for each partner provides double the cover of a joint policy, whilst allowing each partner to insure themselves for different amounts.
What if the relationship comes to an end?
In the instance of a joint policy, there will also be problems if the relationship comes to an end, as splitting a policy is not always a simple process. Further problems can arise if one partner decides they no longer wish to continue paying their share of the premium, as this can cause the policy to lapse.
Keeping the policies separate helps to eradicate this problem, as cover will still be in place for each partner, regardless of a relationship split. This ensures that any future dependents will be fully protected.
Writing a policy in trust
Regardless of whether you opt for one joint, or two single life insurance policies, you should ensure that the policy is written into trust. This ensures the money will be paid quickly, avoiding any undue probate delays. It will also mean that the funds are paid to your nominated beneficiary, rather than your estate, and as such, the payout not be liable to inheritance tax.
For any further information regarding single or jointlife insurance policies, please call our experienced life insurance advisers on 1890 917 917.