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As someone with a spouse or partner, it’s important to ensure that each of you is protected by an appropriate level of cover so you won’t be left to manage your finances on your own if something bad happens. However, it’s worth considering whether to take out a couples’ policy instead of single life insurance.
You can compare a range of offers right here with Savvy to help you secure the most suitable policy for you and your partner’s situation. Simply answer a few quick questions about yourself to generate instant quotes from some of Australia’s leading insurance companies. Start the process with Savvy today.
How does life insurance work for couples?
A couples’ life insurance policy (also known as a joint life insurance policy) is a type of insurance designed to cover two people. These are generally taken out by those who are living together and/or married and whose finances have become interlinked. In terms of what they cover, they’re essentially the same as any other type of life insurance, with a variety of different policies available including:
- Life cover: pays out a lump sum benefit if someone passes away or is diagnosed with a terminal illness
- Total and permanent disability (TPD) cover: pays out a lump sum benefit if someone becomes permanently disabled due to injury or illness and is no longer able to work
- Trauma cover: pays out a lump sum benefit if someone is diagnosed with, or suffers from, a serious illness, such as a heart attack or cancer
- Income protection cover: pays out an ongoing benefit worth 75% to 85% of your monthly income if you fall ill or are injured and are temporarily unable to work
In terms of what happens to your life insurance when you or your wife, husband or significant other passes away, the insured sum will be paid out to the other and coverage will cease. Should you wish to continue being covered by life insurance, you’ll need to take out a new policy.
What are the differences between single life insurance and coverage for couples in Australia?
The main alternative to purchasing a joint life insurance policy as a married couple or de facto partnership is buying two separate single policies. There are several key differences between these two options, which include the following:
- The covered individuals: as the names suggest, life insurance for singles will only offer any coverage for the individual whose name is on the policy as an owner. In contrast, couples’ insurance can offer benefits if either member passes away or falls terminally ill.
- How often benefits are paid out: as mentioned, couples’ life insurance pays out upon the first member of the policy’s death or terminal illness diagnosis. However, with two separate policies, benefits can be paid out for both you and your partner to your nominated beneficiaries.
- What’s covered for each person: by taking out a joint life insurance policy, you’ll have to commit to the same level of coverage for each half of the couple. If each has a single policy, coverage can be more effectively tailored to their specific health and lifestyle needs.
Whether a joint policy or two single policies is the best option for you and your partner will depend on a range of variables, such as your respective lifestyles, health situations, employment and more. You can compare a variety of quotes from leading Australian insurers all in one place with Savvy to help you single out the best policy for you and your partner.
Types of life insurance
The pros and cons of life insurance for couples
Pros
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Cheaper than separate policies
Companies will typically offer discounts on their joint policies, helping you secure cheaper overall coverage by up to 5% or more compared to what you would’ve spent on two policies.
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One single premium payment
Rather than having to worry about setting up multiple payments to separate life insurers on different schedules, couples’ life insurance will only require one payment each month.
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Suitable for couples in similar conditions
If you and your partner are a similar age, working in similar fields and are similarly healthy (or have similar health conditions), it could be worthwhile choosing a joint policy.
Cons
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Only offers one payout
Your life insurance payout and coverage will be completed once the first half of your couple passes away or falls terminally ill, which could leave the other without adequate cover thereafter.
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Can be complicated by separation
Your situation could be complicated if you and your partner split while your coverage is still ongoing, meaning you'll likely have to come to an agreement.
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May not be suitable for different health situations
If, for example, you and your wife take out joint life insurance and she has a pre-existing condition which you don’t, you could end up paying more for your coverage.
