Episode 1 – Joint Life Second Death vs Single Life Cover

Hi everyone, we are back after the lovely summer of 2025. One thing I love about the insurance world is how you can never know everything, there is always so much more to understand and consider. I have a few episodes coming up that have been in the background of my mind for a while. I like to make sure that I have seen things from all angles before I bring it to you.

For the first episode of Season 11 I am taking you some things to consider for joint life second death versus single life cover. You might be thinking, hang on what is Kathryn on about, those types of policies are for different things. It is a unique set of circumstances that I am talking through, but still very important to know.

When I was recording this I realised that what I’m covering is really quite technical and I jump about a bit, between different areas. I’m sorry! There was no way to easily avoid it.

The key takeaways:

Joint life second death policies with a notional decline, cost the same as a single life policy
Pros and cons of a single life policy being arranged instead of JLSD
A case study example of costing for a JLSD policy and JLSD with a notional decline

I’ve also got some exciting news for the podcast, exciting to me anyway. My eldest son Theodore turns 14 soon and is going to start working for me. So all things podcast related including your CPD certificates will soon be done by him.

Next time Alan will be back with me and we will be chatting through arranging protection insurance when you have coeliac disease. There has been some changes when it comes to underwriting that we will be going through.

Remember, if you are listening to this as part of your work, you can claim a CPD certificate on our website, thanks to our sponsors NextGen Planners.

RETURN TO VIEW ALL EPISODES

Transcript

Kathryn Knowles 00:10

Hi everybody. We are back after the lovely summer of 2025, with season 11, episode one. I have something quite exciting happening with the podcast, which hopefully none of you should sort of like see or recognize is happening. But for me, in the background, it’s something quite exciting that I’m happy to be sharing with you all. And it’s, it’s been ages since I’ve done a podcast episode, so I’m really excited to be back and doing this, because there’s just so many things that can pop up on a day to day basis, and insurance that I think, oh, that could be really interesting to chat about, or to just make people a bit more aware of. Sometimes it could be commentary on things like, I’m sure many of us are experiencing some quite longer turnaround times with some things, but more sort of like your technical side of stuff, that’s just really kind of like, Ooh, Oh, that’s something a bit that would be a bit of a different way to do recommendation. Let’s see how we go with it. So today, I’m going to be talking to you about joint life second death insurance for IHT, liability protection, versus potentially doing a single life now I know that probably sounds unusual, or you might be thinking, where’s Kathryn going with this? Bear with me while I explain the sometimes the madness behind the things that I suggest. So this is the practical protection podcast you

Kathryn Knowles 01:40

you. So in terms of the exciting thing for me with the podcast is that some of you will know that I do have three boys, and one of them is just getting to the age where he can actually start working. And he is interested in what we do. You know, he does find things that we talk about quite interesting, and he, we were just chatting, and I was explaining to him, you know, sorry, what if he wanted to do some work? You know, he could do this and that and this and that, if he wanted to potentially work for me, appreciate, you know, do you want to work for your mom kind of thing? But anyway, so I chatted to him, and he was really interested, actually, in doing podcast editing. So he’s starting his training soon. I had to do his own little employment contract, which was just like the sweetest thing that I’ve ever had to do, and job description and everything like that. But I was also like, Oh, my baby, no kind of thing and but that’s exciting. So you’ll be doing like the editing, the uploading, the social media, the marketing materials, obviously, I will be checking it over to make sure that it’s exactly as as I would need to be level wise. And obviously the CPD certificates still fall with me, so don’t worry about that. But just, it’s just an exciting thing for me to be able to be sharing that with him. And hopefully, you know, opens up a few more hours for me to do something else as well.

So now into the insurance side of things. So joint life, second death versus single life cover. So we have, this has happened a couple of times recently. I don’t tend to just bring things to the podcast where it’s maybe, like a one off, it’s maybe it’s things where, you know, we’ve really looked into it. We’ve come across a situation a few times, obviously, all in consultation with, you know, compliance consultants, things like that. And I do have something that’s a bit of an extra consideration when you’re building your recommendations. But as I say, I’ve done my side of things and suggestions with people based upon my internal compliance approval, my external compliance consultants as to what we think is and isn’t okay, things like that. If you do decide to have a look at these different approaches, do double check with your compliance. So if you have a network, do double check with your network and their permissions, as well as people do have different points of views on ways to see things. And it’s, I think the key thing for me is that there’s just the client must always have the pros and cons. You know, there might be two ways of doing something with very, very different pros and cons. And you can give your recommendation. You can say, you know, these are the best ones, and that, you know, maybe, sorry, hint towards, you know, not, not even hint, but say, This is what I would recommend out of these two options. But there’s nothing wrong as well with making them aware of a different option, because ultimately, another advisor firm might make them aware of that different option, and that might be the one that they really want to go for.

So I’m just opening up some extra considerations. Okay, so joint life, second death, we’re using it for IHT planning. So insurance is specifically designed to support the family with a life insurance payout. When both people have died, it’s usually the parents, and that is when the IHT is due. Once both parents have died, a married couple, it is cheap. Her to do joint life, second death, and joint life, first death, okay, it’s usually quite, quite significantly cheaper as well, and and it’s just, it’s just the thing that we do this is that is exactly what that policy is designed for, is the IFT protection. So single life cover is not used when there’s a couple with IHT. So if I had a family come to me and there’s two people, they’re married, they’ve got children, they’ve got IHT, my go to suggestion wouldn’t be single life insurance. So I think that’s really key. When I was saying there about you can show different ways of doing things, but you would still do a recommendation based upon what you see, is best. But there’s very, very specific scenarios I’m going to be chatting about. And it is, it is unique scenarios. But again, I just think it’s really, really important to know them. So obviously you would do single life cover, if it was just one person and they were the ones that had the IHT and potential when they when they pass away. But for a couple, you would do joint life. Second Death, it is more expensive than the joint life of second death. If you do single you’d have to be, I mean, no matter what, you always have to make sure the trusts are done without any error whatsoever. But if you were to do single cover, and there was two people that are married is same. If you were to do it for IHT planning or gift planning, you must make sure that trust is absolutely spot on. And I have done an episode about this before. I’ve talked about the issues that people can have. You need to make sure that the TI statements correct, that there is, you know, if you’re doing it for single but they have a partner, you need to make sure there’s absolutely no way that that partner is going to be inheriting, sort of like, what say inheriting, getting that insurance claim, how it’s going to go to the children? I do appreciate that there might be scenarios where you do want the partner to receive the funds, but I’m talking about in this the general what we would usually expect.

So the thing that we’ve come across, and it’s something that obviously people know that we tend to do and support people who do have disclosures on applications, sometimes making it quite difficult to get insurance. So the question is, what do you do, if they have you applied for joint life of second death, and one of the people is declined. They the insurer says we can’t insure this person. Now, we tend to find that can come from a number of different situations. A lot of people who are looking at the joint life second death tend to be their 50s and onwards. And it’s one of those times where actually things health wise, do start to happen, you know, and it might be that there’s potentially been a recent cancer, it might be there’s an outstanding appointment for something that actually seems very, very minor, and potentially quite minor to the client, but actually in the background of the underwriters, it’s, you know, there is the potential it could be Something quite serious, and you have to really manage those conversations very sensitively. But we’ll just pretend that we have a client, two clients, obviously, married couple wanting to put IHT protection in place, the life insurance. And the application has gone ahead, and one of them has come back to client, one of them standard, and one of them has come back as a decline. What can happen in this situation is a very specific thing called a notional decline. So a notional decline is where someone is declined, but they can still be covered by the insurance policy because the second person has been accepted at standard rates. Really important say as well that the other person is accepted at standard rates. That’s that’s generally a that needs to happen in this situation.

So the person is declined. They can’t be insured by the insurer. However, because it’s a joint life second death, they can and they will be covered by the insurance policy. Please bear with me if you’ve never come across this, because I know that this probably sounds like I’ve absolutely lost the plot. Okay, now I’m going to speak quite bluntly here, so I do apologize for anybody who’s in this situation, potentially consumer who’s facing this and and obviously doesn’t necessarily have this kind of upfront conversation with an advisor, because it’s something that I wouldn’t personally be being so blunt about when I’m speaking to a client, either. But the reason that the insurers can do this notional decline and still ensure the decline person is because they kind of assume that that person as a decline is going to be the one that passes away first. So they’ve seen some medical disclosures, usually, where they think this person, you know, we can’t insure them, because we actually think there’s, there’s, there’s quite a significant risk that they’re going to there’s going to be a claim on the policy for them. Yeah. Yeah. So from there, what they what’s kind of happening is the insurance is, right? We’ve got two people. One of them is a decline. We assume that they’re going to pass first. We’re prepared to ensure the other person. So because this person over here, we think it’s going to pass beforehand, we can include them because we don’t think that that’s going to have any bearing on the joint life second death policy, because it’s always based upon once they’ve both passed. So they’re assuming that the person with standard terms is going to live much, much, much longer, and then base everything pretty much upon that life. So everything becomes focused on the life to be insured, that is standard terms and that that in itself, this scenario is really, really positive. You know, the fact that we can have it where the insurers say, Look, if we were, if you were applying as a single person, we wouldn’t insure. However, because we’ve got this joint you you can be insured, but it changes things. And like I said, joint life, second death, is usually quite a lot cheaper than other options.

Kathryn Knowles 11:09

The problem then that we get is that we’ve got this positive that this person can be named on the insurance policy, so they are covered by the life insurance. However, as I said, Everything focuses upon the Second Life, the one that is the standard terms. So the kind of the insurers ignoring, in a sense, the person that is a decline, a notional decline, that word notion, is really important here, and focusing instead on the standard life. So everything becomes priced as if they were ensuring just the standard life. I’ve got a good example of this later, so I’ll just it’ll really show you the difference that can happen in terms of these pricings. So I said the premium premiums are going to definitely jump up. So that what I do is that we then have this consideration of what is going to be better. Because again, we’ve got another set of considerations here, which are very, very interesting. So the joint life, second death. So we’re going to end up in a big debate thing here. I imagine some compliance people are going to be a bit like, oh, what’s Kathryn on about? Some advisors might be the same, but it is something that is a potential that you can consider, and it might end up working out better for the family in the long run. And very big on the might here, and I’m going to explain some of the big cons here as well. So a joint life, second death, going to pay out when the IHT is due, but and which is exactly what it’s due, but as an example, so we’ve got this we’ve got this scenario, haven’t we? We’ve got a notional decline and a standard terms life. But what happens if the person that’s a notional decline actually lives longer than the standard life, and for some reason the standard life person has passed away? First that can happen. What happens at that point is that the policy, as you would expect, would just continue.

But there’s some extra consideration here. Consideration here, because you’ve now got a person who’s a notional decline, who is probably quite poorly, now having to pay with on their own, because obviously they don’t have this the standard person’s income, or probably the same level of resources, having to pay the premiums of the equivalent of a single life policy on their own. They’re already probably having to spend a lot more in terms of expenses for care, transport, everything like that. And that could be quite tricky. It might mean that actually they are someone if there’s probably that they’re having to really focus upon their savings to go towards extra care when they’re older, possibly care homes. And actually, we’re going to be really eating into that by paying this premium that’s actually quite a bit higher because it’s been calculated, oh, my voice is going let me have some water, calculated on a single life basis. So we can always look at doing something else. We know, with joint life, second death, notional decline. The pricing is the same if there’s a notional decline and there’s a standard term life, the pricing for that joint life, second death policy is exactly the same as if we do a single life, policy only on that standard life. So there’s pros and cons here.

The Pro the single life is that if they do happen to pass away before the declines notional life, that the policy pays out, and then the person who has notional decline isn’t having to carry on those premiums. That could be quite huge in terms of their long term care planning things like that. Negative is obviously that the person isn’t, you know, the notional decline isn’t aimed on the insurance, but in the grand scheme of what we’re trying to achieve, the goal of getting money. To the usually their children, to cover the IHT bill that’s been covered by the single life as well. Because it’s going to be paying out, we’re going to make sure that trust is done specifically so it goes to the children. There’s no way it’s going to go to the partner. But there’s also negatives potentially to that as well. The let’s say that pays out for the single life early. Well, not early, but it pays out. And because the single life has on the standard term, person has passed, money goes to the children. We’ve got pros and cons. Pros are that the money is gone with them. Yes, the IHT isn’t due now, but they could do very, very smart things with that money. They could invest it. Obviously there was risk to that, and they would need a full financial advice to be helping. They could just leave it sitting in a bank account. They could do whatever they want with it, but it has then the potential to grow, actually, until the IHT is due. Now, there is also then the negatives. Now usually talking about, when we’re saying the children receive the funds, we are usually talking about people of an age where they have their own children. And the negatives that you can have is that you, if you suddenly have all these funds and they’re going to be kept there, then actually it might affect them in terms of their children and their planning. So it could affect possible like consideration for assessment, for university support. You know, if you’ve got a certain amount of funds and you don’t get as much support when you’re a student, it could affect the right to some means tested benefits. So that is something to really, really be sort of just open that, you know, this could potentially be an issue.

It might even be that, if you’re advising the parents, and they say, well, we’d like to do a single life option, that you say, Well, is there any chance we could bring the children in so we can explain everything? And obviously you would definitely want to be putting it in your recommendation report as to the potential pros and cons. It might be that these funds are sat there and have been, you know, it’s like just waiting, but actually, one of the children might go through a divorce, and half the funds go to the person that they’re divorcing from as part of the divorce settlements. And then, obviously, they then don’t have the funds that they need to pay the IHT, so the goal of the plan, of the insurance is then lost, and they might also decide stuff it we’re going to build an extension, you know, we’re going to go have that all inclusive trip to Disney in America, anything like that. And again, the funds out there. So it’s really a big consideration. It’s not just about the people you’re insuring. It’s also about the attitudes of the people that will be receiving the funds as well. So there is a lot a lot, lot, lot, lot to consider. In terms of recommendation, I would still go as my gut instinct, as joint life, second death. But there is obviously this option where we could potentially do, I say the single life, and it’s going to cost exactly the same. And it is saying it does have the potential to pay out a bit early and have some growth, which you know could be quite important to some people. It might be something that you want to bring into your financial plans.

I hope that’s all made sense. There was a lot of technical jumping backwards and forwards with that. So I do, do apologize, but there was, there isn’t much else you can do with that. Except, you know, I think the best thing would be to actually have some kind of a PowerPoint where I could have like things moving and seeing, like this person’s here and now this person’s here kind of thing. But essentially, to summarize it down, joint life, second death with a notional decline will cost the same as a single life policy, only on the standard life. They are both good options for different reasons and just an extra little bit of food for thought. So as an example, I just want to show you what it what that can mean, especially those premium differences. So couple, mid 60s, non smokers, and one of them is a notional decline. They want, joint life, second death, whole of life of 1.5 million based upon their IHT requirements. So as a joint life, second death, if they were both standard terms, the premium for that would be 215, pounds per month, okay, but with a notional decline, or as a single policy on one of them, as a standard life, the premium jumps up to 835 pounds per month. So it’s it’s a, it’s a, it’s a jump. Yeah, there’s this. There’s no other way about that. And so it is something to just be really, really aware of. It can be quite a shock actually, when if you’re not familiar with doing joint of second death, if one of them is declined, just how much that premium can can go upwards. And let’s be honest, a lot of people then go, Well, I’m not sure I’m prepared to do that actually, because it. Is just such a huge, huge increase, with over 600 pound more per month in this situation. Obviously, not everybody needs 1.5 million in terms of the insurance. Obviously, some people need it a lot more. Some people need less and but it is just important to see that there can be those very, very significant jumps. Well, thank you all for listening. I hope you’ve enjoyed episode one. It’s lovely to have been back and doing this again. I need to remember next time to make sure I have definitely have some more water to hand so I don’t lose my voice again. And next time, Alan is going to be back with me, I’m going to be talking about celiac disease, because we have seen some changes in underwriting for celiac disease, which have made it a little bit not as straightforward actually. So please do visit the website, practical hyphen protection.co.uk. If you want to listen to smaller episodes and to get your CPD certificate and a massive thank you, as always, to our sponsors, next gen planners, for providing the CPD certificate for the episode. See you soon. Everybody. You you.

Transcript Disclaimer:

Episodes of the Practical Protection Podcast include a transcript of the episode’s audio. The text is the output of AI based transcribing from an audio recording. Although the transcription is largely accurate, in some cases it is incomplete or inaccurate due to inaudible passages or transcription errors and should not be treated as an authoritative record.

We often discuss health and medical conditions in relation to protection insurance and underwriting, always consult with a healthcare professional if you are concerned about any medical conditions and symptoms we have covered in any episode.