Life insurance for couples

Whether you choose joint or individual life insurance, it can cover significant life expenses at a crucial time.

Couples take out life insurance to financially protect the life they’re building together. Insuring themselves so their mortgage and other life expenses are covered if one or both of them can no longer provide financially due to death, disability or involuntary unemployment leads to peace of mind. Some of the decisions they must make is whether to take joint or individual cover, and what level is right for them.

Joint life insurance v individual policies 

Couples looking to purchase life insurance together can choose to take out a joint policy or alternatively they could also take out two individual policies. The biggest difference between the two types of policies is the costs associated and the amount of flexibility they provide. There can be savings and tax benefits associated with individual policies, and they can also be tailored in a way joint policies can’t.

A joint life insurance policy covers two lives (in one policy). Most joint life policies operate on a 'first-death basis' which means the sum insured is paid out just once – when the first member of the couple dies. Couples covered by a joint policy share the same level of cover. It is a way for couples to keep things simple and may be cheaper than taking out two separate policies.

A single life-insurance policy provides cover for one person only. If both partners have single policies and one of them dies, that policy is paid out but the surviving partner is still covered by their own policy. Individuals can increase or decrease their cover independently of one another and include additional cover such as trauma, and total and permanent disability. Individuals can also choose to take out insurance through their superannuation fund. This can be cost-effective as it enables them to pay their premium with pre-tax dollars.

Choosing the right level of cover

Whether a couple opts for a joint life insurance policy or two individual policies it’s important to consider the level of cover that is needed.

Ensuring each partner has sufficient funds to pay any mortgage on a family home is a good starting point. If they have mortgages on investment properties, or other debts, they may want to be insured for the right amount to help pay these off too.

Couples with children often want to ensure the major costs for their upbringing are covered by any insurance. Raising kids can be expensive – the Choosi Cost of Kids Report 2023  revealed the estimated annual average spend on child(ren) is $12,823 per household. Having life insurance can provide financial protection for your family in the event of an unexpected death.  If one partner is not in the paid workforce they may benefit from a buffer of a year or two's living expenses so they're not scrambling to find a job.

What happens to joint life insurance if a couple separates? 

Separating couples who have joint life insurance will typically elect to cancel it when they part ways. If each partner has their own life insurance policy their change of circumstances will not affect their cover in a separation, although they may decide to change the beneficiary named in their policy.

Underinsurance or lack of insurance can have a devastating long-term impact on a family’s future. Whether it’s taken out jointly or individually, life insurance represents the capacity for the surviving partner and their family to continue to live life as planned.