Survivorship Life Insurance
An Estate Planning Solution and Estate Planning Tool
Survivorship Life Insurance, also known as Joint and Survivor Life Insurance or Second to Die Life Insurance, are insurance policies that insure the lives of two people, typically a husband and a wife.
The death benefit is not paid to the beneficiary until the death of the second insured. These life insurance policies are generally available as either whole or universal life policies, and often provide more affordable life insurance than two separate policies.
The reason a second to die life insurance policy doesn’t pay until the second person dies is that it is designed to pay or assist paying for estate taxes. Estate taxes can be delayed until both spouses die thus the design of these special insurance policies.
Survivorship policies are effective tools often used by wealthy individuals in estate planning. By removing the proceeds of a life insurance policy through the use of gifting and placing policies in third party ownership such as a trust or in the name of children, a joint and survivor policy can be used to pay for estate taxes. Careful planning by your tax and legal counsel, coupled with a properly structured second to die life insurance policy, can help you preserve your net worth for your heirs.
Insurance for Special Needs Children
We have had a fair number of couples requesting survivorship life to make sure funds are available for a child with special needs for their care and financial security after the death of both parents. It is also important if you use this planning methodology to get individual life insurance to insure each parent’s income as well. The parents should also look into individual disability insurance. We have worked with other parents to help in this planning. Feel free to contact us to discuss options.
The Survivorship Life Insurance Strategy
Survivorship insurance can be a “discounted dollars” strategy. What that means is that one can use this policy to pay pennies on the dollar now in order to have 100 cent dollars when they’re needed to help pay estate taxes. This is a good analogy for any permanent life policy. For example, if you deposited $10,000 per year in a survivorship policy for $1,000,000 of insurance you are in effect paying 1% a year for 100% later. If the premium is guaranteed and you and your spouse live for 30 years, you would have paid in 30 cents for every dollar. What makes this even more interesting as a strategy is that if you set it up with third party ownership in an insurance trust (or with children as owners) the $1,000,000 could be set up to be both income tax free and not subject to estate taxes. Your attorney can assist you with the trust and ownership part of the strategy. Our job (and expertise) is to find you the most cost-effective policy.
Quotes for Survivorship Life Insurance Policies
If you want the most competitive insurance quotes on second to die policies, we have access to the leading and most competitive survivorship life policies available.