Oak Yard, United Kingdom (PressExposure) February 05, 2009 -- For simplicity standard life cover for couples is usually sold on a 'joint life, first death' basis where the policy will pay out on the first death of the holders and the policy will then be effectively finished.
However in many instances clients would be better of taking advantage of the fact that each individual can actually take out separate life policies for the same (or different) sum assured.
Insurer's quotation systems often price these two policies in the same way for the risk and therefore it is possible to effectively get double the cover for the cost of a second policy fee - just a few pounds per month.
Peter Curtis of IDFM (City) Ltd, a leading London insurance broker says: âIn instances where couples have children separating policies can be invaluable. If one of the parents were to die their policy would pay out but the survivor is left with a policy in place with guaranteed cover.â
Even though the mortgage could be cleared you could argue that the risk on future second death is even greater, the survivor can choose to maintain the cover, reduce the sum assured (and premium) or dispense with the policy.
In the event that both parents were to die, a joint life policy would provide enough cover to clear the mortgage but separate policies would produce two lump sums that can greatly benefit any surviving children and their guardians.
As a leading London Insurance Broker IDFM (City) Ltd find that most clients realise the importance of life cover to ensure that the burden of ongoing mortgage payments is removed in the event of death.
Less common is any form of additional life cover to allow the survivor to have choices in the way that they bring up their children - the average family in the UK has 1.8 children now and both partners are likely to have to work.
Assuming that the mortgage has been fully covered, a capital sum would be paid by the insurer and it would then be up to the survivor to clear the loan in full or in part. The problem is that, even without a mortgage, there will be substantial costs in bringing up a family.
Given the choice, it is likely that the survivor would want to ensure that their need to work did not affect their children's future and that they could manage the two things without the pressure of juggling the household finances.
For further information about the value of separating life cover see http://www.idfmcity.co.uk.