What approach you take will depend on your individual circumstances.
All life insurance policies must have an owner. This is usually the insured, their spouse or their children. Each choice has advantages, disadvantages, and tax implications. You need to think about whether the policy insures just one life or joint lives. A joint life policy generally pays out on the death of the first partner. Because there will only be one pay-out, these policies are usually cheaper than each partner buying an individual policy.
But if your plan is to leave all your assets to your spouse tax-free, it can make sense to have the policy pay out on the second death when any inheritance taxes fall due. The second partner would also be left without life cover and arranging a new policy later in life can be more costly as this article from Investopedia explains.
A policy also needs a named beneficiary or beneficiaries and this is the most important decision you can make. Usually this will be your spouse, children, or other dependents. But choose carefully as they can use the money how they want even if you intended the money to be used to settle estate taxes.
You can also nominate a second beneficiary in case you and your primary beneficiary die together. You can even nominate a charity.
As well as protecting your loved ones should the worse happen, there are also things you can do to protect your lifestyle should you become incapacitated or seriously ill. Read our companion article Do you need income protection? for more details.
