Joint vs single life insurance policies

A joint life policy is one contract covering two lives. The standard form in New Zealand pays on the first death of the two, the sum insured is paid once, and the policy then comes to an end. The surviving partner is left with no cover and must apply again at their new age and their current health.

Two single policies insure the same two people under separate contracts. Each has its own sum insured, its own premium structure and its own beneficiary nomination. If both people die, both policies pay — a scenario families with children should not dismiss, because a car accident does not choose one person.

The pricing gap is smaller than most people expect. Insurers charge the same risk premium for each life either way; what you save on a joint policy is generally one policy fee and sometimes a small multi-life discount. That is a modest saving against a structural weakness.

The separation case is the one advisers see most often and the one couples never plan for. A joint policy is a single contract with two owners, so splitting it usually means cancelling and reapplying — at older ages, and with whatever health history has accumulated in the meantime. It is a bad time to discover that one of you is now uninsurable.

These are the details that decide whether the cover does what you expected. Read them before you compare on price.

• Whether the joint policy pays on first death or on both deaths, and what happens to the contract afterwards.
• Whether there is a survivor’s option to take out fresh cover without underwriting, and for how long after a claim.
• How the policy is split if you separate, and whether that requires new medical evidence.
• Whether the discount is a real reduction in risk premium or simply one policy fee instead of two.
• How trauma and TPD benefits behave on a joint policy — accelerated benefits paid on one life can reduce the other’s cover.
• Who owns the policy and who is nominated to receive the money.

Every New Zealand insurer writes life insurance in new zealand to its own wording, and the words are where the money is. Two policies that look identical on price can pay very differently when it matters. Closing that gap is the entire job of an adviser.

• Policy fee structures differ; with some insurers two single policies cost barely more than one joint policy.
• Some insurers offer a survivor’s cover option on joint policies without new underwriting — it is valuable and it is not standard.
• Splitting cover across two insurers can produce better terms where one partner has a health history the other does not.
• An adviser can size each life separately, which almost always produces a more sensible answer than insuring a couple as a unit.

There are three ways to buy life cover in New Zealand, and they are not equivalent. You can buy direct from one insurer, which means you see one product range and one underwriting appetite. You can buy through your bank, which usually means a single insurer’s product sold under the bank’s brand, often with narrower definitions. Or you can go through an adviser, who quotes several insurers at once and is required to put your interests first.

The premium you pay is the same either way. Insurers build adviser commission into their pricing whether or not an adviser is involved, so going direct does not get you a discount — it just removes the person whose job is to argue your corner at application and at claim time.

• An adviser can see which insurer is currently taking your health history on standard terms, and which one will load or exclude it.
• An adviser can structure cover across two insurers if that produces a better outcome than putting everything with one.
• An adviser handles the underwriting back-and-forth, and is the person who chases the claim when a family is least able to.
• An adviser has to document why the recommendation suits you, which is a written record you can hold them to.

We are a referral service, not an insurer. We do not quote premiums and we do not sell policies. What we do is put you in front of one licensed New Zealand adviser who can compare the market properly.

1. 1

   You tell us what you are looking at

   The form takes about a minute. Nobody asks for your medical history on a web form — that conversation happens with the adviser, properly, and only once you have decided to proceed.

2. 2

   An adviser calls you

   A licensed New Zealand adviser talks through your situation: who depends on you, what you owe, what you already have in place, and what you are actually worried about.

3. 3

   They compare the market

   The adviser quotes across the major insurers, checks which of them will take your health history on the best terms, and puts the options side by side in writing.

4. 4

   You decide, in your own time

   There is no obligation and no cost to you. If the answer is that you already have enough cover, a good adviser will tell you that.