Joint life insurance: Pros & cons and who is it for?
Why get joint life cover? Pros and cons explained
Last updated on
May 14, 2026 11:32
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When you have a mortgage with someone else, it’s crucial to have a plan for how you’d pay it if one of you died.
That’s where joint life insurance comes in.
If your current plan involves separate life insurance policies, joint life insurance could work just as well and be cheaper. But there are a few things you need to know, as we’ll explain.
Joint life insurance is one insurance policy that covers two people - usually they’re a couple and share financial commitments like a mortgage. If one of you dies, the other gets a lump sum payout to cover bills and expenses. That payout could be used to clear the mortgage.
You don’t need to be married or in a civil partnership to have joint life insurance. It’s sometimes called “couples life insurance” but you don’t even need to be in a couple. You might be friends or siblings who bought a house together, for example. The key is that you share financial responsibilities.
It’s usually cheaper to have joint life insurance than two separate policies, but a joint policy pays out only once, on the first death, and then it ends. This means the surviving partner no longer has life cover - they’d need to take out a new policy if they needed it. This wouldn’t arise if each person had their own policy to start with.
With a joint policy, you need to both agree on the amount you want to cover, and for how long. During the application process, you’ll both need to answer questions about your health, your job and your lifestyle, and the premiums will be based on how risky the insurer thinks you are (how likely to make a claim).
Many life insurance policies include terminal illness cover, although features and eligibility vary between insurers.
Life insurance is just one way to give you and your loved ones some financial runway to cover the mortgage if you stopped being able to pay it. There are other ways to protect yourself. As with all insurance, cover is subject to eligibility, underwriting, exclusions and policy terms
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It’s possible to get “dual life insurance” which is one policy that insures each person separately, meaning that after the first death, the surviving policyholder is still covered and the policy will pay out again on their death if there’s a valid claim.
When you’re choosing the type of policy and amount you need to insure, think about everything you need the payout to cover: that might include school or university fees, funeral costs, household bills and the mortgage.
If you need it to meet other costs - particularly if you have children - then you might choose to insure an amount that’s more than the mortgage, and keep it the same throughout the term.
If you just need it to pay off a repayment mortgage, the amount you insure can drop in line with your mortgage debt over time.
Taking out life insurance to cover your mortgage isn’t a legal requirement. But many lenders recommend it. These days, it’s common for two people in a household to be contributing to the mortgage. Having joint life insurance in place could help your loved ones stay in their home if you or your partner died and a valid claim is paid
Even if only one person in the household is earning a salary and the other’s looking after the kids, if that person died, there could also be a major financial impact on the family.
“Level term” life insurance pays out a fixed sum throughout the period you’re covered. If you have an interest-only mortgage, or you’re looking to do more than pay the mortgage - provide for university fees, or leave an inheritance, for example, then you might consider level term. It’s typically more expensive than decreasing term.
“Decreasing term” life insurance is a typical choice for people with a repayment mortgage who just need an amount that would clear the debt if they died. As that mortgage balance drops over time, the cover drops with it, which makes the premiums cheaper overall. The term of the policy matches the term of the mortgage. Some people call it “joint mortgage life insurance”.
We’ve explained further in our full guide to mortgage life insurance.
With a joint policy, on the “first death”, the surviving policyholder receives the payout.
Most joint mortgage life insurance is set up for people who are married or in a civil partnership, and in both these cases, anything left to the surviving partner is exempt from inheritance tax.
But if the two people involved aren’t married or civil partners, then half the payout is considered part of the deceased’s estate, which means it could be subject to inheritance tax depending on the size of their estate.
For this reason, if you’re getting a joint policy with someone and you’re not married or in a civil partnership with them, it’s worth talking with your broker or insurer about putting the policy “into trust”. It’s straightforward for insurers to do this and it means the money paid out is not considered part of your estate.
Tax treatment depends on your individual circumstances and may change in future.
It’s important to discuss your options with an expert when it comes to trusts.
It’s worth knowing that if you own your property as “tenants in common” rather than “joint tenants”, that can impact the size of your estate when you die.
Joint tenants both own the entire property. Tenants in common each own part of the property - for example, half each. In this case, HMRC may consider that only half the debt belongs to the deceased and when their executor is tallying up the debts and assets of the estate, they’ll only be able to deduct half the mortgage debt.
If you are tenants in common, it’s worth flagging this with your broker or insurer when discussing a joint life insurance policy.
You can chat with Habito’s protection experts for free to discuss your insurance options. We’ll search a range of insurers on our panel and, where appropriate, recommend suitable cover based on what you tell us. Our advice is free to you. If you take out a policy through us, we may receive commission from the insurer.
Important: Life insurance policies may not pay out in all circumstances. Exclusions, terms and conditions apply. You must keep up premium payments for cover to remain in place.
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Policies generally include a “contestability period” of 1-2 years after a death in which the insurer can come back for more information such as medical records or post-mortem details. The insurer is checking that you didn’t withhold information when you applied for the policy - if it decides you did, it may reject a claim.
Many life insurance policies include a “suicide exclusion” clause, which says that if you die by suicide within a specific period after you take out the policy, the insurer won’t pay out. The period is usually 1-2 years. This is to reduce the chances that someone might see taking out a policy as a financial incentive to kill themselves.
If you have a joint account and one of you dies, the surviving partner usually then owns all the money in it. Probate isn’t needed for this, but the bank might want to see the death certificate.
You might still need probate for assets which weren’t jointly owned, though.
If your partner dies and you were married or in a civil partnership, you are exempt from paying inheritance tax on anything they leave to you. That’s the case regardless of how the assets were owned (jointly or not).
If you weren’t married or in a civil partnership and you owned a property as joint tenants, if your partner dies the property automatically passes to you. But the value of their share of the property is included in their estate when calculating inheritance tax. There’s a sizeable tax-free allowance before you have to pay any inheritance tax, though.
Tax rules and thresholds change and it’s always a good idea to check with a professional advisor when planning ahead and considering tax implications.
When the policy term ends, your cover automatically stops and it’s no longer possible to make a claim on the policy. You won’t get anything back if you outlive your policy.
If you’re coming to the end of the term, think about whether you might still need cover. If you think you do, your options could include extending the term or starting a new policy. Your premiums are likely to cost more, though, as you’ll be older than when you first applied. It’s a good idea to talk through your options with an expert.
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