Joint or Single Life Insurance: Which One Should You Choose?
In this article, we break down the difference between single and joint life insurance coverage.
Life insurance has one important job. It replaces the income you would have earned had you lived a long life and continued to make money. Sometimes, it makes sense for you to have your own life insurance policy. Other times it can be easier, and more affordable, to share a policy with your spouse or a business partner.
What is joint life insurance?
Joint life insurance is a single policy that covers two people. The insurance provider uses the combined age, gender, and health status of each partner to determine the cost of coverage. This type of policy can work in favour of couples with a significant age or health difference.
Types of joint policies
You can choose between a “joint first to die” or “joint last to die” death benefit (i.e., a payment made to designated family members, other loved ones, or the charity of your choice after you die). In the first case, the policy pays out when the first partner dies. In the second case, there is no payout until the surviving partner dies.
Whether you’re purchasing couples life insurance or a business-owned life insurance option for you and your co-owners, here’s an easy way to compare joint first and last to die alternatives.
| Couples | Choose this option when your spouse will need the insurance payout to cover the cost of living on a single income. This could include mortgage payments and helping the kids pay for their education. | This option is better when there isn’t an urgent need for money because your partner has enough income or received a payout from an employee life insurance plan. It’s also a great option for parents who want to ensure their children are still taken care of financially after they’re both gone. |
| Business owners | Choose this option when each partner wants the other one to have enough money to keep the business running. This amount should be spelled out in a standard Buy-Sell Agreement. | This option is better when the business partner has enough money to carry on solo. It’s a great option for business partners who wish to pass on the business to the next generation after their death because the insurance payout can be used to pay taxes or smooth the transition to new owners. |
A Buy-Sell Agreement is a contractual agreement where, should a business owner die, their share of the business is bought at a predetermined price by the remaining owners through a life insurance payout.
What are the benefits vs. drawbacks of joint life insurance?
Joint policies have a place in many personal and business financial plans. Each type of coverage has benefits and drawbacks that we explore here.
| For couples, joint life insurance is a powerful estate-planning tool that can help them leave a larger, tax-free inheritance to their beneficiaries. | The major drawback of joint life insurance is that the policy could dissolve if the relationship ends. This can put people in the position of having to apply for single coverage later in life when it might be more expensive due to age and health considerations. |
| For business owners, leaving money to cover outstanding debt is a good long-term strategy for protecting partners or loved ones, and for keeping the business alive well into the future. | |
| For a more in-depth look at the advantages of joint life insurance, check out our guide to joint life insurance in Canada or speak to a Serenia Life advisor. | |
What is single or individual life insurance?
Single life insurance covers only the policy owner. The premiums (i.e., the amount you pay for an insurance policy) are based on the age, gender, and health status of the individual applicant. This can be great for a young, relatively healthy person because that’s when the cost of insurance is at its lowest.
Types of single policies
Single life insurance policies can be personalized in many ways to fit your budget and adapt to unusual circumstances using a variety of riders (i.e., coverage that gets added on to an insurance policy to provide additional payouts under specific circumstances). They range from simple, easy-to-manage term life insurance options, to more complex whole life insurance coverage.
What are the benefits vs. drawbacks of single life insurance?
Single life insurance policies provide quick tax-free payouts to the policy’s beneficiaries (i.e., the persons you choose to receive your life insurance payment in the event of your death). At Serenia Life, we’re proud of our incredible claims history that includes an approval rate that consistently exceeds 99.9%1.
In the case of whole life insurance, you also have access to a cash reserve that allows you to borrow money2 from your own policy to spend however you choose. For example, you may need extra money for things like your kids’ tuition or to help finance your retirement in the future.
| Unlike joint life insurance, you, as an individual, have full control over the policy. This means you can make changes, designate new beneficiaries, enhance coverage, or even cancel at any time. | For couples, the cost of owning separate life insurance policies may be higher, and administratively, two policies require more time and effort to manage than one joint policy (e.g. timing of payments may differ, two policies requiring a review versus one joint policy, etc.). |
| As business owner, a single policy gives you more control over who gets what. For example, you could leave money to business partners and/or family members. It’s entirely up to you. | Business owners may be passing on an extra layer of complexity for their loved ones. For example, the family may need to pay for legal or tax advice if there are capital gains that affect the final tax return of the departed person. |
If you’re still on the fence when it comes to choosing joint or single life insurance, let us help. A Serenia Life advisor can take a look at your situation and help you decide. In the meantime, here’s a quick summary of who’s most likely to purchase each kind of coverage
Joint life insurance versus single: Key differences
| Joint | Individual | |
|---|---|---|
| Who owns the policy? | Joint coverage can be owned by couples, business partners, or a corporation. The owners are responsible for cost of the policy. | Individual coverage can be owned by one or two people (e.g., only husband is covered, but both partners are owners of the policy, parents of a dependent, etc.). |
| Who is it for? | Business owners and couples who are looking for the most affordable option and wish to leave the payout to the next generation instead of each other. | Business owners and couples who would like to leave the payout to their partner. It’s also ideal for people who would like full control of their policy, independent of a spouse or associate. |
| When does it pay out? | This depends on whether you choose first or last to die coverage (see above). | After the individual dies, as long as payments have been made. |
| How much does it cost? | Joint life insurance is typically less expensive (per person) because it is based on combined age and health. | The total cost of single coverage for two individuals can be more expensive than a joint policy for the same two people – but remember, life insurance is always most affordable when you’re young and in good health. |
| Can policies be changed or cancelled? | Changes to a joint policy must be made with the consent of both policy owners. | It’s easier to make changes to your coverage as long as your policy is in good standing, meaning all payments continue to be made. |
Who should consider joint life insurance?
Here are three common reasons why a licensed insurance agent might recommend using a joint life insurance policy to provide coverage for two people
The Savers | The Planners | The Partners |
 The Watsons are a multi-generational couple who are looking for an affordable option despite the fact that one is older and has a chronic health condition. |  Mr. and Mrs. Law share joint life insurance policy because they are leaving their family cottage to their adult son in their will – they want the payout to help cover capital gains taxes that they know their son could not afford on his own. |  Greg and Martin co-own a café so they insured themselves to protect their families from debt or other expenses, and to keep the business alive long after they’re gone. |
Who should consider individual life insurance?
Some people are better off with a single life insurance policy tailored specifically to their needs. Here are a few examples of individuals who received valuable advice from their advisor on how to protect themselves.
The New Homeowners | The Concerned Parents | The Savvy Parents |
 The Craigs are young and recently bought a home with quite a large mortgage, which they could not afford on a single income. With a Term 30 policy, they feel better knowing their spouse could still afford to live in their “forever home” in the event one of them were to die too soon. |  Darryl is a stay-at-home parent with no life insurance coverage. His spouse has a group plan through work, so it makes sense for him to purchase a Term 20 policy. They want to make sure they have enough money to raise the kids on their own in case of the unexpected. |  The Gills chose to purchase an individual whole life insurance policy for each of their children. Because whole life policies come with an investment component, they view this as a smart way to invest in their kids’ future. |
Why choose Serenia Life for joint or single life insurance?
Whether you choose joint life or single life insurance coverage, what matters most is getting the type of policy and the amount of coverage that’s right for you and your loved ones. A Serenia Life advisor can help you make the right choice and explain how your coverage works.
Not to mention, as a member-based organization whose roots go back nearly 100 years, we encourage kindness by sharing our profits through community outreach, fundraising, and unique member benefits that help Canadians support their families and their communities, including:
- $2,500 post-secondary scholarships
- Up to $600 towards a fundraising event, and up to $400 to help with the cost of volunteering in Canada
- Financial support when you hire a lawyer to draft or update your will
- And much more!
View a full list of our member benefits
Joint or single life insurance. What’s right for you?
You can’t go wrong by planning for the future and protecting your loved ones. We can help you choose between joint or personal life insurance coverage that fits into your current budget and provides all the flexibility you need down the road. Want a free needs analysis? Fill out this form, and we’ll be in touch soon!
Disclaimers
1 Life insurance claims statistics 2018-2023.
2Cash values are accessible via a withdrawal, policy loan, or surrender. These may be subject to taxation and a tax slip may be issued. Accessing the policy’s cash value will reduce the available cash surrender value and death benefit.
