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Choosing the right life insurance is essential for safeguarding your loved ones and securing your family’s financial future.
Whether you’re a super mum, super dad, single parent, or just got married, you might be considering whether joint or dual life insurance is the best option.
Each option has advantages, but the best choice depends on your unique needs and circumstances. Let’s explore their differences, so you can make informed decisions supporting your family’s financial well-being.
Why is Life Insurance Important for Families?
Did you know Ireland’s average cost of raising a child to adulthood is over €100,000? Imagine if something happened to you—how would your spouse manage this huge financial burden alone?
Life insurance can provide crucial financial security for your family in the event of your premature death. It ensures that your family receives a payout to help cover living expenses, debts like mortgages and loans, and other financial needs such as education and hobbies.
Additionally, life insurance can be combined with other cover options that protect your family if you cannot work, maintaining your ability to support them financially, such as Serious Illness Cover, Health Insurance and Income Protection. This comprehensive protection helps safeguard your family’s future and stability.
Learn more by reading our blog on life insurance for families.
What is Joint Life Insurance?
Joint life insurance covers two people under a single policy, typically a married couple or registered civil partners.
The policy pays a death benefit upon the death of either the first or second life assured, depending on whether the policy is set up on a joint life first death or joint life second death basis. Once this payout is made, the policy typically ends, leaving the surviving partner without further cover.
Pros of Joint Life Insurance:
Cost-effective: Joint life insurance premiums are generally lower than two separate individual policies. This can be an appealing option if you’re looking to save on costs.
Convenience: Joint life insurance can be easier to maintain and understand, with only one regular payment and one policy to manage.
Ideal to protect your partner: A joint policy ensures that the surviving partner is financially supported if both partners are equally responsible for debts like a mortgage.
Cons of Joint Life Insurance:
Single Payout: Joint life insurance typically provides only one payout after the first partner’s death, leaving the surviving partner without protection.
Higher Costs for the surviving partner: The surviving partner is left without life insurance, which might necessitate buying a new policy, often at a higher cost due to increased age or health issues.
What is Dual Life Insurance?
Dual Life Insurance is a policy that covers two individuals, typically a couple, under a single plan. Unlike joint life insurance, which pays out only once, Dual Life Insurance offers the benefit of two potential payouts—one upon the death of each life assured.
This means that if one person passes away, the surviving partner continues to be covered by the policy without securing new insurance. This type of insurance is essential for couples who want to ensure that financial support is available after both have passed, providing additional peace of mind and security for their loved ones.
Pros of Dual Life Insurance:
Two Separate Payouts: Both policies pay out upon death, meaning that even after one partner dies, the other still retains protection.
Ideal for Couples with Children: Dual Life Insurance is particularly well-suited for couples with children. The policy will pay out on the death of the first person and on the death of the second one, too. The second payout can help ensure that children are financially supported even after the loss of both parents.
Continued Cover: If one person passes away, the policy continues to provide cover for the surviving partner without the need to secure a new policy, which can be beneficial as the surviving partner ages or if their health condition changes.
Cons of Dual Life Insurance:
Higher Premiums: Dual Life insurance typically has higher premiums compared to joint life insurance due to the potential for two payouts.
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What Life Insurance Options Are Available as Dual or Joint Cover?
Joint or Dual Life Insurance for Mortgage Protection
Couples commonly use this type of insurance to cover their mortgage. It ensures that the mortgage is paid off if one partner passes away, providing financial security for the surviving partner. Both joint and dual life policies are available, with the main difference being that dual life insurance can be paid out twice—once upon each partner’s death.
Joint or Dual Life Insurance for Serious Illness Cover
You can also take out a joint or dual life policy with specified illness cover. This means that if either you or your partner is diagnosed with a serious illness covered by the policy, a lump sum will be paid out. This can provide financial support if one of you cannot work due to an illness specified in your policy.
Joint or Dual Whole of Life Insurance
Whole of life insurance policies offer lifetime protection with no term limits. You can opt for a joint or dual life policy, where the cover lasts as long as either or both partners are alive.
Upon the death of one or both partners (depending on the type of policy), the policy pays out a lump sum, which can be used for any purpose, such as covering funeral costs or inheritance tax.
Which One Is Better for You?
The decision between joint and dual life insurance ultimately depends on your personal situation. Here are a few considerations to help you decide:
Shared Financial Commitments
A joint life insurance policy might be a practical solution if you and your partner have significant shared financial obligations, such as a mortgage or other large debts. A joint policy ensures the surviving partner can cover these commitments without financial strain.
If your financial commitments are not entirely shared, or if you want to ensure that each partner’s responsibilities (such as child support from a previous marriage) are covered independently, dual life insurance may offer better protection.
Cost Considerations
Joint life insurance is generally cheaper because it covers both partners under one plan. However, it only pays out once, upon the first partner’s death. This means that while the premiums are lower, the surviving partner must consider their ongoing financial needs, as the policy ends after the first payout.
On the other hand, dual life insurance is generally more expensive, as it provides independent cover for each individual. Each policy could potentially pay out, offering more comprehensive protection but at a higher cost.
Dependents
Dual life insurance is a great way to ensure that your dependents are financially protected if you or your partner passes away. If one person dies, the policy pays out to provide immediate support to your family while continuing to cover the life of the surviving partner.
This means that even after the first payout, the remaining policy remains active, offering ongoing protection and peace of mind. You never know what the future holds, and having dual life insurance helps remove financial risks for your family, ensuring they are taken care of no matter what happens.
Consider Estate Planning
When choosing life insurance, estate planning is a crucial factor to consider. There’s no one-size-fits-all answer between joint and dual life insurance, so evaluating your financial goals, obligations, and future plans with your partner is essential.
Consulting one of our financial advisors can help you make the best decision for your situation. Whether you prefer the lower cost of a joint policy or the security of dual life insurance, the key is to ensure your loved ones are well-protected.
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How Much Cover Do You Need and How Much Is Life Insurance?
A valuable resource when planning for life insurance is the life insurance calculator. This tool provides an estimated amount of life cover you might need, acting as a guideline to assist in your preliminary calculations.
Additionally, you can request a quote directly through our service, which compares the best life insurance providers in Ireland all in one place. This convenience allows you to shop around without the need to visit multiple websites—we do all the work for you.
Are you wondering why purchasing life insurance through a broker might be your best choice? Brokers can offer personalised advice and access to a broader range of products than you might find on your own, with better prices!
To understand the advantages in more detail, read our article on why buying life insurance from a broker could be more beneficial for you.
What’s The Ideal Life Insurance Cover For Cohabiting Couples?
For cohabiting couples, dual, or joint life insurance might not be the best option because of tax implications. If you’re not married and one of you passes away, the life insurance payout to the surviving partner could be taxed.
You can use a “life of another” policy to avoid this. This means each of you has a separate life insurance policy, and you pay the premiums for each other’s cover. This type of insurance helps avoid tax problems and acknowledges your relationship as a couple.
Example:
Imagine Sarah and John are a cohabiting couple but not married. If John buys a regular life insurance policy and names Sarah as the beneficiary, and he passes away, Sarah might have to pay a significant amount of tax on the payout because they’re not married.
To avoid this, they could use a “life of another” policy. In this case, Sarah buys a life insurance policy on John’s life, and John buys a policy on Sarah’s life. Each of them pays the premium for the other’s policy. If one of them passes away, the surviving partner receives the payout without worrying about extra taxes. This approach also clearly establishes their financial relationship as a couple.
Get a Life Insurance Quote
Speak with one of our financial advisors, who can guide you, help you understand your options, and ensure you get the best possible policy for your situation.
If you’re unsure about which type of policy is best for you, our experts are here to guide you. We’ll consider your unique situation and goals to help you choose the cover that suits your needs perfectly.
We also provide a wide variety of financial services, such as mortgages, serious illness cover, pensions, financial planning, health insurance, and savings & investments.
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All our content has been written or overseen by a qualified financial advisor. However, you should always seek individual financial advice for your unique circumstances.
