Byline: Stephen Womack
Dec. 5--Couples own houses together, have joint bank accounts and share savings, but when they take out life insurance they are often better off as singletons. Buying separate his-and-hers life and critical illness cover is usually better value than having one policy in joint names.
Harris Frazer, a director of independent adviser Mason Financial Planning in Manchester, says: "Couples come in with the preconceived notion that joint cover will work out far cheaper.
"In fact, our preferred option is to arrange separate insurance policies for both of them. It is often more economical."
There are several reasons for this, says Frazer. A joint policy ends the moment a death or critical illness claim is made. With individual cover, the partner who has not claimed remains insured.
And as Frazer points out: "If, heaven forbid, both partners die together, there is twice the payout." This is not the case with joint cover, where there will be only one payout, whatever the circumstances.
Jason King, who runs specialist adviser Life Policies Direct in Telford, Shropshire, also believes in individual insurance plans. "Separate policies are more flexible," he says.
"You can change one at a later stage if needed, for example if one of the couple is given a pay increase. And if the relationship comes to an end, each partner can carry on with independent insurance."
Many critical illness policies also pay a lump sum if a child is diagnosed with a serious condition. Two policies means two payments. But there is a price to pay for this extra flexibility.
Two single-life policies, each for 100,000 pounds, will usually cost up to 20 per cent more than a joint policy. Frazer says that a non-smoking couple, where the man is aged 35 and the woman 32, would pay 32.67 pounds a month for a u20,000-a-year joint family income benefit until age 60.
Two individual policies would together cost u4.16 a month more.
King says: "One in three clients who takes our advice ends up choosing to spend a little more and select two individual policies rather than joint cover."
Ian Dean, 29, and Nikki Anderson, 23, bought separate policies to protect their family -- their son Tyler, aged 14 months, Nikki's daughter Chloe, 6, and Ian's daughter Daisy, 8.
Ian, a head chef, says: "We've been meaning for ages to get some insurance to protect the children.
"I looked on the internet and found the quotes from Life Policies Direct looked competitive."
After speaking to an adviser with the company, Ian was convinced that separate policies for him and Nikki, a factory worker, were the best bet.
The couple, from Peterborough, Cambridgeshire, are both insured for 100,000 pounds until 60, Nikki with Friends Provident and Ian with Legal & General.
Together, they pay 20.12 pounds a month compared with a best price of 19.14 pounds a month for 30 years of joint cover.
Ian says: "It is a tiny bit more to pay, but doubling the cover seems a much better deal."
There can be circumstances where joint insurance is still the best option, though. King says: "If all you are trying to do is protect a mortgage, where there is a single debt to pay, joint cover makes sense."
LASTING BENEFIT OF A GOOD FIB
A little FIB -- Family Income Benefit -- can sometimes do a lot of good.
These policies run for a term, say 25 years. But rather than paying a lump sum if the policyholder dies, it instead gives your dependents a regular tax-free income.
"This is paid monthly until the end of the term.
Jason King, left, says: "The insurance plugs an income gap for a set period, often while the children are growing up. It costs about two-thirds the price of level term insurance, though the payout is less if you die close to the end of the term."
Providers of family income benefit policies include Legal & General, Scottish Equitable and Liverpool Victoria.
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