Single vs Joint Life Insurance: Pros and Cons for Canadians

July 18, 2024

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14 mins

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In This Article

Key takeaways

Single Life Insurance: Ideal for those not in a committed relationship.
Two Single Policies: Perfect for couples who want different coverage amounts or term lengths.
Joint Life Insurance: Best if you and your partner want the same coverage.
Close in Age & Health: Joint policies work well if both partners are similar in age and health.

Single vs. Joint Life Insurance: What is the Difference?

When deciding on life insurance, one key decision is whether to choose a single or joint policy. Both options offer unique benefits and can be tailored to fit different needs and circumstances.

Single Life Insurance

A single life insurance policy covers one person. This type of policy is straightforward and provides a payout to your designated beneficiary if you pass away. It's an excellent choice for those who are not in a committed relationship. If you and your partner have a significant age difference, single policies might be more suitable since they allow for different term lengths and coverage amounts tailored to each person's specific needs.

Single life insurance is also ideal if either of you has health issues that could affect the premiums or the ability to get coverage. By having separate policies, each person can get coverage based on their individual health situation, potentially saving money and ensuring proper coverage. Additionally, if either of you has children from a previous relationship, a single policy can provide more direct and specific financial protection for them.

Joint Life Insurance

A joint life insurance policy covers two people under one policy, typically a married couple or partners in a long-term committed relationship. Joint policies are often chosen by couples who share significant financial obligations, such as a mortgage or debts, as they provide a shared coverage amount to help manage these responsibilities.

Joint life insurance is particularly beneficial if you and your partner are close in age and both in good health. This similarity can make the joint policy more cost-effective. Joint policies often come in two forms: first-to-die, which pays out upon the death of the first insured person, and second-to-die, which pays out after both insured individuals have passed away. This can be advantageous for estate planning and ensuring that your beneficiaries are well taken care of.

Key Differences

Flexibility: Single life insurance policies provide more flexibility, allowing each person to choose their own coverage amount and term length. This customization is ideal for couples with different insurance needs, ensuring that each person gets the coverage they require.
Payout Structure: Joint policies often pay out on the first death (first-to-die) or the second death (second-to-die), affecting how the benefits are received. First-to-die policies can help the surviving partner manage immediate financial burdens, while second-to-die policies are useful for leaving a legacy or covering estate taxes.

<h2 id="2">Single vs Joint: Which One is Better for Me?</h2>

When it comes to life insurance, choosing between single and joint policies can be a bit tricky. Here’s a detailed look to help you make the best decision for your unique situation.

Joint Life Insurance: Ideal for Shared Responsibilities

Joint life insurance might be the better option if you and your partner:

Committed Relationship: You’re in a long-term, committed partnership.
Shared Financial Responsibilities: You have shared financial obligations like children, a mortgage, or significant debts.
Similar Age and Health: Both partners are close in age and in good health, making joint policies more cost-effective.

Joint policies often come with a lower premium compared to two separate policies, making them a budget-friendly choice for couples who share financial responsibilities. However, it’s important to remember that a joint policy pays out only once, typically upon the death of the first insured partner.

Single Life Insurance: Tailored for Individual Needs

Single life insurance could be the better choice if:

Individual Status: You’re not in a committed relationship.
Age Difference: There’s a significant age gap between you and your partner, which can impact the cost and benefits of a joint policy.
Health Concerns: One or both of you have health issues that could affect your eligibility or premiums.
Blended Families: Either partner has children from a previous relationship, necessitating more tailored coverage.

Single policies offer greater flexibility. Each policy can be customized to fit the specific needs and circumstances of the individual, ensuring that both partners get the coverage that suits them best.

In short: Joint life insurance policies tend to be more affordable. Separate policies are more flexible if you and your partner have different needs or want robust coverage for your situation.

This chart can help you decide whether single or joint life insurance is better for you.

Graphic detailing benefits of single vs joint life insurance

Joint Life: Pros & Cons

Joint life insurance is a policy that covers two people and pays out upon the death of one. Here’s a detailed look at the pros and cons to help you decide if it’s right for you.

Pros of Joint Life Insurance

Affordability: Joint policies are often more affordable than two separate single policies, making them a budget-friendly option for couples.
Simplified Application: Applying for a joint policy is usually easier and faster since there’s only one application process for both partners.
Shared Coverage: Both partners get the same coverage amount and term length, which simplifies managing your life insurance needs.

Cons of Joint Life Insurance

First-to-Die Policy: Most joint life insurance policies are first-to-die, meaning the death benefit is paid out upon the death of the first partner. The surviving partner is then left without coverage.
Age and Health Disparities: If there’s a significant age or health difference between partners, the first-to-die clause can be problematic. The younger or healthier partner might be left without coverage and face higher premiums when purchasing a new policy.
Increased Costs for the Surviving Partner: Buying a new policy later in life is more expensive, especially if the surviving partner’s health has declined.
Complications After Separation: If you split up with your partner, dealing with a joint policy can be cumbersome. Each partner’s coverage needs might change, complicating the separation process.

Single Life Insurance: Pros & Cons

Individual life insurance is a policy that covers one person and is paid by that person. You're the only one who can cancel your policy. It's different from joint life insurance, which covers two people under one policy, and group life insurance, which is tied to your job or group membership and ends if you leave.

Pros of Single Life Insurance:

Personalized Coverage: You can tailor the policy to fit your specific needs, including the amount of coverage and the term length.
Flexibility: Since the policy is only for you, you have complete control over it. You can make changes, upgrade, or cancel it without needing anyone else’s consent.
No Shared Risk: Your policy isn’t affected by your partner’s age or health, which can keep premiums lower if your partner has health issues or is significantly older.
Independence: You don’t have to worry about losing coverage if your relationship status changes or if you separate from your partner.

Cons of Single Life Insurance:

Cost: Single policies might be more expensive compared to joint policies if both partners are in good health and close in age.
Separate Policies Needed: Couples need to manage two separate policies, which can be less convenient than a joint policy.
No Shared Benefits: The policy benefits are only for you, so in case of a partner’s death, you’ll need separate coverage for them.

<h2 id="5">Key Considerations: Choosing Between Single vs Joint</h2>

Choosing between single and joint life insurance depends on what suits your needs best. Some Canadians might find they have different financial needs than their partner while others might find a joint policy is a perfect fit.

We have gathered some points you can consider while choosing between the types of policies you can have:

Single Life Insurance

Personalized Coverage: You can tailor the policy to fit your exact needs and preferences. This includes choosing the coverage amount, term length, and any additional riders such as accelerated death benefits or waiver of premium. This customization ensures that the policy aligns perfectly with your financial situation and future plans.
Complete Control: With single life insurance, you have the autonomy to make changes or cancel the policy at any time without needing anyone else’s consent. This allows you to adjust your coverage in response to life changes such as marriage, the birth of a child, or changes in financial goals, ensuring your policy remains relevant and effective.
Independence: Your coverage is based solely on your own health and risk factors, meaning it is not affected by your partner’s age or health status. This is particularly beneficial if your partner has health issues or if there is a significant age difference between you, as it ensures your policy remains stable and unaffected by their circumstances.
Financial Independence: If partners have different financial incomes and assets, an individual policy might be a better fit to cover the unique financial responsibilities of each partner. This allows each person to secure coverage that reflects their individual income, debts, and financial goals, providing a more precise and effective financial safety net.

Joint Life Insurance

Cost-Effective: Joint life insurance is often more affordable than purchasing two separate policies. By covering two people under a single policy, insurance providers can offer lower premiums. This cost savings can be significant, making joint life insurance an attractive option for couples looking to minimize their insurance expenses while still ensuring coverage for both partners.
Shared Coverage: This type of policy is ideal if you and your partner want the same level of coverage. Joint life insurance provides a unified approach to life insurance, ensuring that both individuals are equally covered. This can be particularly useful for couples with shared financial goals and responsibilities, such as paying off a mortgage or funding their children's education.
One Payout: A key feature of joint life insurance is that it pays out only once, typically upon the death of the first insured person. This means that the surviving partner will receive the death benefit, which can be used to cover immediate financial needs, debts, and other expenses. However, it's important to consider that after the first payout, the policy terminates, leaving the surviving partner without further life insurance coverage unless they purchase a new policy.
Limiting Coverage: Joint life insurance usually offers less flexibility in coverage compared to individual policies. Since the policy must cover two people at once, it cannot be tailored as specifically to the unique needs of each partner. This can be a drawback if one partner has different insurance needs or if there is a significant disparity in age, health status, or financial responsibilities between the two individuals. The shared nature of the policy means that it may not be as customizable to address the unique circumstances of each partner effectively.

Summary: Single vs. Joint Life Insurance

Single Life Insurance: Perfect if you’re not in a committed relationship.
Best for Different Needs: Great for couples who need different coverage amounts or term lengths.
Joint Life Insurance: Ideal if you and your partner want the same coverage.
Best for Affordable Rates: Best for couples who are close in age and in good health and are looking for a policy that can cover both of them at once.

<h2 id="7">FAQs: Single vs. Joint Life Insurance</h2>

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         <h3 class="toggle-text referral__faqtoggle">What are the disadvantages of joint life insurance?
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        	<p>Joint life insurance can be a great way to save on premiums, but it has its drawbacks. One major disadvantage is that it typically pays out only once, usually when the first partner passes away. This means the surviving partner is left without coverage and might need to purchase a new policy later, which could be more expensive due to age or health changes. Also, joint policies can lack flexibility because they need to cover both partners equally, making it difficult to tailor coverage to individual needs and financial situations.
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        	<p>Another issue is that if your relationship status changes, altering a joint policy can be tricky. If you and your partner separate or divorce, navigating the policy details and ensuring fair adjustments can be complex and stressful. Moreover, joint life insurance might not be the best fit if there's a significant age or health difference between partners, as the policy will be influenced by the higher risk individual, potentially leading to higher premiums than initially expected. For Canadians looking for tailored coverage that adapts to individual circumstances, a single life insurance policy might be a better fit.
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        	<p>Absolutely, married couples should consider having separate life insurance policies if it is an option for them. Single policies offer greater flexibility, allowing each partner to tailor their coverage to their unique needs and financial situations. This is particularly beneficial if there’s a significant age difference, health disparity, or different income levels between partners. Plus, single policies mean you’re not left without coverage if the other partner passes away and the joint policy pays out. But, if you and your partner are in the same financial boat and are looking for affordable coverage, joint life is still an excellent choice for married couples. The biggest thing to consider is what are each of your individual needs and if that joint plan covers them.</p>			
        	<p>In Canada, individual life insurance can be especially advantageous. Our healthcare system is fantastic, but it doesn’t cover everything. By having separate policies, couples can ensure that each person has enough coverage to handle unexpected expenses or support family goals like paying off a mortgage or funding education. Moreover, with individual policies, you have the freedom to adjust or change your coverage without affecting your partner’s insurance, giving both partners full control over their financial planning.</p>			
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        	<p>A joint life insurance policy is a great option for Canadian couples who share financial responsibilities and want to save on premiums. It’s particularly beneficial if you and your partner have similar insurance needs and goals, like paying off a mortgage or ensuring your children's future education. By bundling your coverage into one policy, you often pay less compared to two separate policies. Plus, the simplicity of managing one policy instead of two can be a real time-saver.</p>			
        	<p>However, joint life insurance isn't a one-size-fits-all solution. It’s ideal for partners who are in good health and close in age, as the policy is based on shared factors. Keep in mind that the policy pays out only once, typically upon the first death, leaving the survivor without coverage afterward. If one partner has significantly different insurance needs or health issues, separate policies might offer better protection. Ultimately, it’s about finding the right balance between cost and coverage for your unique situation.
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        	<p>Splitting a joint life insurance policy isn't as straightforward as it sounds. In most cases, once you’re locked into a joint policy, you can't simply separate it into two individual policies. Joint life insurance is designed to cover two people under a single contract, usually with one payout after the first person passes away. If your circumstances change, like in the event of a divorce or significant life changes, you might need to explore new individual policies instead.</p>			
        	<p>For Canadians, it's essential to consider the long-term implications before opting for joint life insurance. If you think you might need separate policies in the future, it could be wiser to start with individual coverage. This way, you maintain full control over your policy, adjusting it as needed without being tied to another person’s situation. Always talk to a trusted insurance advisor to understand your options and find the best solution for your specific needs.
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Laura McKay

COO & Co-Founder