Survivorship (or Second-to-Die) Life Insurance is a specialized type of Life Insurance that covers two individuals (typically a married couple). The policy’s death benefit is only paid after the passing of both insured individuals. Sometimes this type of policy is also used by parents with special needs children to provide funds for care should anything happen to the parents.
A Smart Strategy for Protecting Your Legacy
Lower Costs
Survivorship policies are typically more affordable than buying two separate life insurance policies, as premiums are based on the combined life expectancy of both insured individuals. However, it’s important to note that no benefit is paid until both have passed, and the surviving partner or estate must continue paying premiums after the first death.
Estate Protection
Survivorship life insurance is often used by high-net-worth couples to help cover estate taxes and settlement costs after the second spouse’s death. These policies are frequently held in irrevocable trusts to keep the benefit outside the taxable estate. This strategy can help heirs avoid selling valuable assets — like a family business or real estate — to cover estate tax obligations.
Lenient Underwriting
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.
Advantages of a Survivorship Life Insurance?
Survivorship life insurance (or second-to-die insurance) covers two individuals, usually spouses, under one policy that pays out after both have passed. This structure often costs less than two separate policies, particularly when one person has health concerns. It’s a valuable tool for estate planning, helping protect heirs from estate taxes, fund trusts, and efficiently transfer wealth to future generations.
Survivorship life insurance helps equalize inheritances, especially when on heir is involved in a family business, without forcing asset sales. It can also build an estate, offers tax-deferred cash value, and provides a cost-effective way to leave a meaningful legacy, with death benefits often exceeding premiums.
Get One Step Closer To Being Completely Covered
