Life of Another Life Insurance

Morning all,

Im after some help please.

2 clients, husband and wife. want 150K cover to pay out on either death.

I was going to go down the usual route of either joint life first death or 2 policies on own life with nominations in place. Someone has suggested that using life of another may be more appropriate.

Would you consider a life of another policy for each rather than own life policies with nominations in place?

What are the benefits or life of another policies?

Im struggling with this one so any help would be greatly received.


  • As far as I'm aware there would be no advantage to having a life of another policy over own life policies that are held in trust, as neither would fall into the estate of the deceased.

    Disadvantage of life of another policy; A third party such as a partner or spouse owns the plan. If in the future your relationship with that third party breaks down, the plan may no longer be appropriate and may have to be replaced at a significantly increased cost, (assuming there have been no changes to your health that may make it more difficult to get the cover you are looking for) or you may have to try to get the plan assigned back to yourself which may not be easy to do.

  • The issue of" life of another" policies impacted by divorce can be resolved quite easily by way of transfer of ownership of the policy as part of any financial settlement.

    @seanhurst - In your post you say the clients want £150k on either death or did you mean on each death? I know there was a time (may be still is) where the cost of a joint life first death plan was (roughly) the same as two individual plans so you got twice the cover for very marginal cost difference.

    Life of another is administratively simpler at outset / death claim - no trust / trustees etc. However, such an approach does dump £150,000 of cash in the survivor's estate which may (or may not) be appropriate depending on what the money is to be used for.

    My mantra for life policies has always been, "life policy should be in Trust, unless you can prove this wrong because of client specific circumstances".

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