Survivorship Life Insurance (Second-to-Die)
Survivorship (or Second-to-Die) Life Insurance is a special type of Life Insurance that covers two individuals (usually a married couple). The policy’s death benefit is only paid after the passing of both insured individuals. And it is most often used for estate protection. Sometimes this type of policy is also used by parents with special needs children, to provide funds for care should anything happens to the parents.
This type of policy is generally less expensive than purchasing two individual life policies. The premiums are based on the combined life expectancy, and no benefits are paid until the death of both policyholders. One consideration is that the surviving partner or estate will need to continue to pay the premiums on the policy after the death of the first partner.
Since the mid-1980s, Survivorship policies have become popular with wealthy couples as a way to offset estate tax liabilities and other estate-settlement costs that remained unpaid after the death of the second spouse. This type of policy is often held in an irrevocable trust to avoid inclusion in the estate for estate tax calculations. Owning a second to die policy can help prevent your children from having to sell off assets, including a family business or real estate in order to pay estate taxes.
It is easier to qualify for a Survivorship policy, since two people are being insured, instead of just one. Insurers also tend to be more lenient if one spouse is not as healthy as the other, or is otherwise uninsurable. Why? Because the insurance company knows that they will continue to collect premiums until both parties have died.
What are the advantages of a Survivorship Life Insurance?
- Less expensive than a traditional single-insured policy
- Protects your estate so your children won’t have to pay estate taxes
- Allows you to set up and fund a trust for your children or grandchildren
- More affordable (even if one spouse is not as health as the other) than owning two individual policies
- Can be used to equalize an estate when one or more children may be in a family business and others may not be
- Also may be used simply to create or augment your estate
- Death benefits are typically achieved for pennies on the dollar in terms of total premiums paid per dollar of death benefit received
- Builds cash value tax-deferred – that can be accessed for a variety of personal needs
With a Survivorship life insurance policy, the death benefit arrives just in time to help your children and grandchildren.
Survivorship /Second-to-Die Life Insurance Quote
To find out more about Survivorship life insurance, or to ask any question about life insurance,
Call 800-442-9899 to speak with one of our experienced advisors.