When a relationship ends it brings a lot of emotional stress, domestic upset and messy financial agreements to resolve. With 42% of marriages ending in divorce and each costing almost £15,000 on average, the cleaner the cut, the better.(https://www.moneyadviceservice.org.uk/blog/how-much-does-a-divorce-cost)

When evaluating shared financial assets, both parties need to factor in any protection policies they might have had in place, and what steps might be needed in order to sever any ties, and how they can best keep in place the cover they had, and which may have become even more important as they separate and start new financial lives, with added commitments and possibly arrangements for any children. In this article we take a look at how joint life plans can be separated.

If the couple held a joint life insurance policy, they will need to consider whether the provider will grant a separation benefit, which will allow them to divide a joint policy into two. This may apply whether the plan is linked to a mortgage or is a standalone joint life insurance policy and often demands an application for changes to be made within a set time period after separation, with a 90-day period considered fairly standard.

Separation benefits are typically relevant in one of three circumstances: divorce or dissolution of a civil partnership; the transfer of a mortgage over to one name; or when one party moves out of the shared home and into another house.

As our chart shows, all 11 leading insurers offering the benefit did so at the point of divorce or when a civil partnership is being dissolved. Transferring the mortgage to just one of the parties’ names was slightly less common, with only Aegon’s life policy and the life cover by LV= not offering the benefit in this particular circumstance.

In a scenario where one half of the couple were moving out and into another house, the feature was even rarer, with only six of the 11 providers – Aviva, Guardian, Legal & General, Royal London, Scottish Widows and Zurich – honouring this situation.

The age at which a claim is valid varies between providers

Provider
Maximum age
Aegon
70 or above
AIG
No maximum age
Aviva
55
Canada Life
No maximum age
Guardian
No maximum age
Legal & General
No maximum age
LV=
No maximum age
Royal London
No maximum age
Scottish Widows
No maximum age
Vitality Life
54
Zurich
No maximum age

As our table shows, seven providers stating there was no maximum age after which the separation option cannot be applied, which might be reassuring for older policyholders, who – according to Relate are both increasingly getting married, while also being the demographic (the over 50s) that are seeing a rise in the number getting divorced (https://www.relate.org.uk/about-us/media-centre/press-releases/2019/3/28/relate-responds-ons-marriage-statistics)

Nine of the 11 providers said the policy option would kick in if the policyholder was under 70, while Aviva and Vitality were a little more restrictive, citing upper limits of 55 and 54 respectively, before their separation options could no longer be applied.

While most providers offer a separation benefit to clients that have been accepted with a rating, Aegon and Aviva do not. The rates on which the new policy will be set up are largely split down the middle, with six providers – Aegon (Personal Protection), AIG Your Life Plan Term Assurance, Aviva, Legal & General, LV= and Zurich – offering on the rates at the time of request. The remaining five providers – Canada Life, Guardian, Royal London, Scottish Widows and VitalityLife PPP – will apply the rates from when the original policy was set up.

Generally the separation options are along similar lines, but the Aviva and Vitality restrictions on the maximum age to effect this option are limiting. And the ability to set up a new plan on rates applied when the original plan was taken out, permitted by Canada Life, Guardian, Royal London, Scottish Widows and Vitality is especially helpful if separation is an event that happens quite some time after any initial protection purchase and when clients are older