An Effective Tool for Estate & Legacy Planning
Survivorship Life Insurance, also known as Joint and Survivor 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 survivorship life insurance policies are generally available as either whole or universal life policies, and second to die life insurance often provides more affordable life insurance than two separate policies.
The reason a survivorship 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.
Joint Survivorship life insurance 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.
This life insurance fund is also available for a child with special needs for their care and financial security after the death of both parents. It is also important to get individual life insurance to insure each parent's income as well.
If a spouse of wealthy couple dies, all the assets will go to the surviving spouse (if he or she is a US citizen), but if the rest of spouse dies, then the inheritance tax will be imposed on the accumulated assets. That means their children will be responsible for the heavy burden. Therefore, if couples or business partners expected their asset values would exceed the exemption values, they should consider arranging the effective estate tax planning beforehand.
With Survivorship Life insurance, you can quickly take care of the inheritance tax with the death benefit you will receive. Another advantage of Survivorship Life is that it is economical because this one premium covers the lives of two people. If one of the spouses is healthy, this insurance may cover for both although the other spouse is not insurable. This type of insurance is available to be purchased in the form of Term insurance, Whole insurance, or Universal insurance.