Survivorship Life Insurance

Also known as second-to-die insurance, survivorship life insurance covers two people on the same policy. In this scenario, the death benefit is not paid until the second person’s death.

Survivorship Life Insurance Costs

Since this type of insurance covers two people, the premiums are much higher than a regular policy. Survivorship life insurance is often a consideration for those who want to provide protection for their heirs from excessive estate taxes when they die. Primarily for wealthy individuals who have a net worth in excess of $2 million, survivorship life insurance is an effective estate planning tool to preserve the estate’s value.

Suited for Survivorship Life Insurance?

Since survivorship insurance is designed for wealthy individuals, it is not suited for everyone. This type of policy also requires that the insured persons consult with legal and tax professionals due to the complexities of estate planning.

Again, since this type of policy is best suited for affluent people, it is generally not applicable to the general population. If your major consideration is cost, you will want to visit our term life insurance page for information on death protection for a low cost premium.

Survivorship life insurance and Estate Protection

Survivorship life insurance is a valuable tool for people who need to protect their estate following their death. This is best illustrated in a description from the Mass Mutual insurance website:

“If you are married, your estate, within federal limits, will pass to your spouse free of federal estate taxes when you die. However, once your spouse dies, taxes can pose a serious problem to your heirs. The second-to-die policy death benefit proceeds can provide funds needed to pay estate taxes and reduce or eliminate the need for your heirs to liquidate your estate.”

From this excerpt, you can see how this type of policy protects the estate from the impact of excessive taxation. Estate taxes can reach as high as 55%, depending on the size of the estate. To assist your beneficiaries with these heavy taxes, survivorship life insurance protects the estate by allowing them to use the death benefit payout for the taxes. This type of protection is critical so that heirs are not strapped by heavy taxes and forced to lose a family estate or business.