Understanding the Differences Between Single vs. Joint Life Insurance

As you enter adulthood, you’re hit with a bevy of new terms. What’s a mortgage rate? What are non-refundable tax credits? What are executors, powers of attorney and codicils? These new terms, each important in their own way, come at you fast – and keeping up with everything can be tricky.

So, you’d be forgiven for not knowing the difference between single and joint life insurance policies. Even if you have a basic working understanding of life insurance, you may scratch your head at the various types available. But it’s something you should know, since your choice may ultimately dictate how your loved ones are cared for if you pass away.

To help guide you through the decision, this article unpacks what you need to know about single and joint life insurance.

What Is Single Life Insurance?

Single life insurance refers to an individual policy covering one person. When you sign a single life insurance policy, you pay a premium to the insurance company each month. In return, the insurance company pays your beneficiary if you pass away. Crucially, you personalize the terms and parameters of the agreement, including conditions and premiums.

Having said all of that, you can merge your policy with your spouse’s if you sign up simultaneously. In these cases, you are both the holders of a single life insurance policy, you each dictate the terms of your own policy, and each policy pays out its own death benefits.

What Is Joint Life Insurance?

By contrast, joint life insurance refers to a single policy covering two people. Rather than evaluating one person, these policies – through some actuarial wizardry –combine the mortality rates of both parties to determine an “equivalent age.”

You can subdivide joint life insurance further into types: first-to-die and last-to-die. If you can set aside the intimidating names, you’ll find that these types are relatively straightforward to understand. The former describes a policy in which death benefits pay out when one person passes away, while the latter refers to a policy that only pays out when both people covered pass away.

Similarities and Differences

Let’s start with the similarities. Both types of life insurance provide peace of mind to couples. Both involve paying a monthly premium in return for a potential death benefit. And both policies are subject to an underwriting process.

Even still, there are significant differences. Joint life insurance policies are generally more affordable, and couples like the ease of applying for a single policy rather than two individual policies. However, joint policies can be inflexible, preventing either party from selecting terms relevant to their needs, goals, health and lifestyle. Further, joint policies can be tricky to navigate if a couple splits up.

By contrast, two single policies can be more expensive. But they allow each person in a relationship to personalize their policy. Moreover, single life insurance pays out when either in the couple passes away, and the remaining partner remains insured.

Which policy you choose will ultimately depend on your individual and collective needs and preferences. Are you in a committed long-term relationship? Are you relatively close in age and in similar health? Do you value flexibility or cost savings? These are a few questions you can ask yourself as you research further. Alternatively, you can speak to a life insurance expert to help determine what’s right for you.