As you’re developing risk management strategies to protect your loved ones, it may make sense to consider a survivorship life insurance policy.
Also known as second-to-die insurance, survivorship life insurance is a type of joint life insurance. Typically, these are whole life policies, but they can also be universal life or another form of insurance. Survivorship policies differ from traditional life insurance because they are written on two lives, not just one.
An important characteristic of survivorship life insurance is that both of the insured must die before a death benefit is paid. In other words, if one spouse dies, the second spouse is not paid a benefit. To keep the policy, the surviving spouse must continue to make premium payments. Once the second spouse dies, a death benefit is paid to the policy’s named beneficiaries. When paid, the death benefit is typically free from federal income taxes.
Survivorship life insurance typically costs less than purchasing two separate life insurance policies, which can make it an appealing option for couples who wish to leave assets to heirs.
Because these policies only pay a death benefit after both spouses die, they are typically used for very specific purposes.
Survivorship life insurance is not a good solution if one spouse will need help paying for daily living expenses after the other spouse passes away, since no death benefit is paid until after both spouses die.
To determine if survivorship life insurance is right for you, ask yourself the following questions.
Could you use some help determining if a survivorship life insurance policy makes sense for your particular situation? Scureman and Associates is here for you. We specialize in helping clients identify, implement and maintain life insurance policies that meet their specific needs and help protect their future. For a complimentary insurance assessment, please schedule a call.
