Also called joint survivorship life insurance, second to die insurance can be an effective estate planning tool. As with any joint survivorship insurance, second to die life insurance insures more than one person, typically a married couple. With second to die, insurance companies pay benefits once the surviving spouse passes on as well.
Many seniors have a large portion of their wealth in non-liquid assets, such as real estate or a family business. Without cash, the estate itself may be partially liquidated to pay the federal government before allowing the heirs access to their inheritance. Many people use this type of insurance to pay off estate taxes, whether partially or in full.
An insurance policy in a person’s name usually becomes part of their estate. To ensure that the proceeds of second to die insurance will not be subjected to estate tax, it is ideal to gift the policy to an adult heir or have it placed in an irrevocable trust. This way, once the couple is deceased, the money will not be considered part of their estate anymore and the proceeds will go directly to their heirs, who can use the proceeds to pay off the estate taxes or any other wishes of the estate.
Second to die insurance can be easier to apply and get approved for than other types of policies, especially if one of the spouses is still healthy. Also, with this type of life insurance, you will be able to build cash value that can be bequeathed to your heirs along with the death benefit. Since second to die insurance covers two people, it is generally less expensive than having two separate policies.
Second to die insurance is a good choice for couples who are already financially secure and looking for ways to ease the burden of estate taxes on their heirs, or wants to increase the inheritance they leave to their heirs. Because this type of insurance will only pay out once both parties are deceased, it is not recommended for people who are not financially stable yet, as the surviving spouse may need the death benefit to continue to maintain their standard of living.
if you are looking for other Life Insurance options for Seniors, please contact Puritan Life today!
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