How to Decide Between Single vs Joint Life Insurance

Is joint life insurance right for your family? It’s an important question to think about, especially when you have a partner and kids who depend on you. 

“When one spouse or partner in a relationship dies before another, financial difficulties from loss of income are the last thing anyone wants to deal with,” explains Time Magazine.

The good news is that getting the right coverage to protect your family is easier than you think. Couples can opt for separate policies or joint life insurance. There are benefits and drawbacks to both, so let’s examine both and see which works better for your family.

Joint life insurance explained

For many couples, a joint life insurance policy is one worth considering when looking into life insurance options.

In contrast, a single life insurance policy only covers one person. If you choose to go this route, you and your partner will purchase and hold policies separate from one another. But you can combine your policies if you apply for them at the same time (more on that later!).

This means that you and your partner can customize the terms, premiums and conditions for your respective policies.

However, if only one of you gets around to purchasing life insurance and the other passes away, the surviving partner will be left with no payout or financial safety net.

Joint life insurance definition

Joint life insurance is a single policy that covers two people and provides a financial payout to the named beneficiaries. They come in two main types: first-to-die and last-to-die. For further information on naming a beneficiary, consult the Financial Consumer Agency of Canada’s explanation of the thought process and legal ramifications.

The money can be used to pay off liabilities, cover funeral costs, support dependents or replace lost income. 

Graphic defining life insurance that reads "Life insurance acts as a financial safety net for your beneficiaries (your partner and/or kids) if you pass away)." for article about single vs joint life insurance

Joint life insurance vs. single life insurance

How do you choose between joint life insurance and single life insurance? It depends on your circumstances. 

Joint insurance might be a good fit if you and your partner:

  • Are in a committed relationship
  • Have children, a mortgage, debts or other financial responsibilities
  • Are close in age and of good health

However, it may be a better fit to hold individual policies that fit your specific situations, if:

  • There’s a significant age difference between you and your partner
  • Either of you suffer from health issues
  • Either of you have children from a previous relationship

You can apply for two policies separately or do it together and have your insurer combine the two life insurance policies for you. This is called combined life insurance.

Check out our handy flow chart below to see whether single or joint life insurance is better for you.

Graphic detailing benefits of single vs joint life insurance

Pros and cons of joint life insurance

We’ve come up with a quick primer on the pros and cons of opting for joint life insurance to help you decide. 

Pros

1.  Joint life insurance is affordable and accessible to young families looking for coverage.

  • It’s less expensive for a company to cover two people with one payout
  • The administrative costs of underwriting two people together are lower than insuring two people on separate occasions

2.  Applying for joint life insurance is a more straightforward process.

  • Applying for joint life insurance is quicker and easier than going through the process of securing two policies

Cons

1.  Joint policies are challenging to split up.

  • If you and your partner decide to divorce or separate, there’s no simple way to divide a joint life insurance policy
  • You may choose to keep the policy as-is, transfer it to one spouse, or cancel it altogether

2.  Obtaining individual coverage later in life can be expensive.

  • If your partner passes away or you choose to separate, you may need to buy a single life insurance policy for yourself
  • The costs of life insurance can be significantly higher if you’re older or have health problems

3.  With joint policies, both you and your partner are covered for the same amount and term.

  • If you and your partner have different needs or goals for your life insurance, separate policies may offer the flexibility you need to tailor your coverage.

If you know you need life insurance but don’t have the time to wait for quotes or compare coverage, let our rate calculator help. We've cut unnecessary steps and expenses to offer you the most affordable product in Canada, with the same quality of coverage.

You can get an instant quote for both single and joint policies and apply for coverage on the spot, when you activate your policy with your partner, you save 5%.

The three main types of joint life insurance policies

There are a few types of joint life insurance policies. Each type best serves a different purpose or situation, so let’s take a closer look.

We’ve broken these types down out below in an easy-to-read chart. Use it to compare the specs between first-to-die, last-to-die, combined and single life insurance policies. 

Chart comparing types of joint life insurance policies for article about single vs. joint life insurance

Read our detailed overview of the different types of life insurance.

Joint first-to-die life insurance policy

Most joint insurance policies will pay out once for the first partner that passes during the term of coverage. The money goes to the surviving partner to help pay for living expenses, support young children or cover funeral costs. 

This is called a joint first-to-die policy. It’s the best option when spouses share financial obligations such as a mortgage, debts or have children in their care. While you can name other beneficiaries, the payout from these policies are generally intended to benefit a partner.

Why? First-to-die policies act as “income replacement” policies, just like a traditional term insurance policy. It helps reduce the impact of a sudden loss of salary when a partner passes away.

Joint last-to-die life insurance policy

A joint last-to-die policy serves a different purpose. Also known as a survivorship policy, this type of insurance only pays out after both partners have passed. For this reason, it’s not the right policy to choose if you want a payout to go to your spouse. 

Often, the couple’s children are named as the beneficiaries and the payout is meant to ensure their ongoing financial stability, rather than cover any debts or obligations.

In addition, when someone passes, they may leave behind a hefty tax bill for their estate to settle. Last-to-die life insurance helps pay any remaining tax liabilities on the deceased individuals’ assets and reduces the costs on the surviving family. 

Combined life insurance policy

Combined life insurance isn’t actually a joint life insurance policy at all. It works differently from first-to-die and last-to-die insurance, where one policy covers both people in a relationship.  

Instead, combined life insurance joins two separate policies, with different terms, conditions and payouts.

When each partner holds their own policy, two separate death benefits can be paid out. However, insurers will often offer a discount for combining policies since they only have to charge a single policy fee when underwriting two people at the same time.

In summary: comparing single and joint life insurance

Having life insurance gives you peace of mind, knowing that your family will be taken care of no matter what happens. If you’re in a relationship, you can choose between single life insurance and joint life insurance.

  • A single life insurance policy covers one person, while a joint life insurance policy covers two under the same terms
  • You and your partner can obtain single life insurance separately, or at the same time through the same company, and have your policies combined
  • Each single life insurance policy is eligible for one payout
  • You can also opt for a joint life insurance policy for more affordable coverage
  • Even though it covers two people, a joint policy only pays out once

We want to make it easy for busy parents to figure out their life insurance needs.

Our rate calculator demystifies the costs involved by giving you an instant quote for single and joint life insurance options. You'll save 5% when you and your partner apply online together, saving you time and money. The entire application process takes less than 20 minutes per application.

FAQ: Joint life insurance

Does joint life insurance pay out twice?

It depends on the type of joint life insurance you hold. For example, First-to-die and last-to-die insurance only pay out once because they operate as one policy covering two people. 

However, combined life insurance does pay out twice. It’s when you and your spouse opt for two separate policies from the same insurance company at the same time. Two policies = two payouts.

Is it cheaper to get life insurance as a couple? 

Generally, yes—it’s more affordable to opt for one policy, or even two policies at the same time (in the case of combined life insurance) than to go for it separately, at different times. 

Because it’s more efficient for your insurer to underwrite two people at the same time, there’s usually a small discount involved when you apply for insurance as a couple.

How much life insurance do married couples need? 

It depends on your goals. If you were to pass, would you want your home paid off? Your children’s RESPs funded? For your spouse to receive funds to supplement their income? 

There’s no hard and fast rule, but consider things like

  • The amount outstanding on your mortgage and other debts
  • The costs involved in caring for your dependents
  • The amount of replacement income to leave for the surviving spouse

In general, policies are often purchased for anywhere between 5 and 10 times the holder’s annual salary. According to the Canadian Life & Health Insurance Association, the average Canadian household is insured for about $442,000.

Do you need life insurance when you get married? 

The purpose of life insurance is to leave behind a financial safety net for your family in case you or your partner passes. So you don’t have to be married to start thinking about life insurance.

Once you’re in a committed relationship with shared financial obligations, it’s a good idea to consider taking out a policy to protect your partner and children.


Laura McKay

COO & Co-Founder

About the Author

Laura brings 7 years of experience working in insurance & strategic operations as a management consultant at Oliver Wyman, after experiences at Manulife and Munich Re. In 2017, she launched a successful initiative for the World Economic Forum focused on innovation in insurance, working closely with insurers, tech pioneers, and policy-makers.

What to read next