As a mum, you’re not just responsible for your own life but also the lives of your children.
With so many things to worry about, it can be easy to get overwhelmed and overlook certain aspects – financial protection can be one of them.
Thinking about your family’s life if you were no longer around can be a painful thought, but one that needs to be considered in order to secure the right protection. For a mum, life insurance is essential for securing the financial future of your family.
But what is life insurance and how does it work?
Life insurance is a form of financial protection that will pay out to your loved ones if you pass away while your policy is active. Your loved ones can then use this pay out to cover any new financial obligations.
From paying off the mortgage in full so your children can stay in the family home, to covering additional childcare costs or simply leaving an inheritance for your kids to spend how they wish – a life insurance pay out could take care of all of this.
There are multiple policy options that can be taken out, including term life insurance (level and decreasing), whole of life insurance and family income benefit.
You also have the option of taking out a single policy or a joint life insurance policy.
Many parents choose to take out a joint life insurance policy as an easy way of providing cover for their children. But what are the advantages (and disadvantages) of this policy type?
Award-winning UK life insurance broker, Reassured, explain the pros and cons of joint life insurance.
Pro: Save money
We all like a good saving and the main benefit of a joint life insurance policy is that it can help you save money when taking out life cover (compared to two separate policies).
With a joint life insurance policy, the lives of you and your partner will be covered under one policy. So, there’s only one application to fill in and just one premium to pay between you both.
It’s possible to save up to 25% when taking out a joint policy compared to taking out two separate policies. If you’re on a budget and just want some form on cover in place to protect your kids, this can be a good option.
While the idea of saving money can be tempting, life insurance isn’t something to be scrimped on. It’s important to make sure that the cover you’re paying for is the right amount of cover to protect your loved ones – otherwise this could end up costing you more in the long run.
Con: Only one pay out
The downside to having a shared policy, is that it only provides one pay out. This will usually be after the first death and after this the policy will expire, leaving the surviving partner unprotected (and needing to secure a new policy).
Securing a policy later on in life can mean you end up paying more for your cover as you’ll be at an older age with potentially less favourable health (and therefore a higher risk in the eyes of insurers).
What’s more, in a worst-case scenario where both policyholders were to pass away within a close time frame, one pay out simply may be enough to cover all the associated costs.
By taking out two separate policies, you’ll benefit from more comprehensive cover and you’ll have peace of mind that there will be sufficient funds left.
Pro : Save time
Having only one form to fill in can help you to save time during the application process.
You’ll need to provide information about both parties, including your age, medical history and smoking status.
However, it’s important to be aware that this can also have a negative impact on your policy.
If you or your partner has a pre-existing medical condition, is a smoker or leads a less healthy lifestyle you’ll both experience inflated premiums, which means one of you could be left paying over the odds for their cover.
By taking out two separate policies, you can ensure that you’re not paying more than is necessary.
Con: you can’t split a joint policy
No one wants to think about what life will be like when they’re no longer around and, similarly, no one wants to think about a potential relationship breakdown.
The truth is that divorce happens and, not only can this have a big impact on your life but also your life insurance.
Joint life insurance after a divorce can get complicated as a lot of insurers won’t allow you to split a joint policy.
So, if you and your partner decide to separate, you’ll most likely end up having to cancel your joint policy and you’ll each need to take out a new policy to meet your new financial requirements.
If you’re doing this at an older age, it can become costly (particularly if there’s been any changes to your medical history). If it’s within your budget at the time, taking out two separate policies from the beginning can be more beneficial and can elevate financial stress in the future.
If you’re not sure whether joint life insurance is a good match for you, comparing quotes for both joint and single policies can help you make a fully informed decision. You could do this yourself or you could talk to a life insurance expert (such as a broker, like Reassured).
A life insurance broker can compare multiple policies on your behalf, helping you to save time and money.