Joint Life vs Double Individual Life Assurance

Chubba

Hello

We are looking to get some life assurance to protect our first mortgage. I've read that it may be worth getting single policies rather than joint if there is little difference in the premiums. How does this work exactly?

I had been looking at joint life decreasing term assurance so am assuming if getting two singles, it would have to be level terms otherwise it wouldn't work?

Also, if I do go for the decreasing term assured, is it guaranteed to pay off the outstanding mortgage on first death?

Many thanks

dunstonh

ve read that it may be worth getting single policies rather than joint if there is little difference in the premiums. How does this work exactly?

it doesnt really work with mortgage life assurance as you have one need and there is no point paying more for it.

Also, if I do go for the decreasing term assured, is it guaranteed to pay off the outstanding mortgage on first death?

Some do, some don't (it may be limited to a maximum tolerance within the interest rate).

weighty1_2

Hi Chubba,

As Dunstonh and you yourself say, there isn't really a reason to have 2 separate decreasing term plans, as the mortgage can only be repaid once. Only 2 companies I can think of jump out as offering a mortgage repayment guarantees (Friends Provident and Bright Grey - although you have to specifically choose it with BG).

In all honesty I wouldn't be overly concerned about that as many companies will guarantee to repay the mortgage provided the average interest rate at the point of claim is less than 10%. If my mortgage interest rate was ever 10% on average over a number of years, I'b be more bothered about how I was going to pay it, rather than worrying if a couple of thousands pounds was outstanding!!

In relation to having 2 separate level term plans, is there a reason why you would like to pay a slightly higher premium for the potential double payout? Do you have children for example, or do you just think it provides better value for money? Many people think about the value but then don't think just how unlikely it is that both partners will claim during the term of the plan, especially when there is no specific need for the remaining.

brianrhill

For a joint policy it may be a good idea to ensure the policy also has the option included to remove and add a life assured. Many relationships fall by the wayside and you don't want an inflexible policy should that event occur.