survivor estate / second to die life insurance:
survivor estate life insurance policy also known as second to die policy pays a
death benefit after the death of the second insured party. The risk is lower that
the insurer will have to pay within a particular period of time as the benefit is
paid only after the deaths of two people. Typically, premiums on second to die life
insurance policies are lower due to the reduced risk to insurers.
In other words, survivorship life insurance provides a single policy that insures
two lives, usually spouses. When the first spouse dies, no proceeds are paid.
Instead, the policy remains in force and the surviving spouse must continue to
pay premiums. The second to die insurance policy pays off only upon the death of
the second spouse.
A Second to Die Life Insurance policy is primarily used to cover the estate taxes
that become due when the second spouse passes away. Survivor Estate life insurance
is desirable when one holds assets such as a family business or real estate interests --
assets that aren't liquid, and which the survivors may not want to sell.
To take an example, let us say two children inherit a family business, but one
doesn't want to keep it going. The other could use one share of the insurance
proceeds as an initial buy-out payment, so that he/she could retain ownership of
the business. This is one of the many ways how second to die policy differentiates
itself from the other types of life insurance.
With Second-to-Die life insurance, there usually are doubts regarding its
applicability if one of the partners to be insured does not have a good health
record. This is not a problem though, since the death proceeds from the policy are
not paid until the second person passes away, and hence it is usually not a problem
to obtain a Second-to-Die life policy as long as one of the individuals to be
insured is in good health.
How does Second to die life insurance / Survivor Estate Life Insurance help?
- Wealth Accumulation Opportunities
A second-to-Die policy can be used to add-on to your retirement income.
The money can be tapped through withdrawals or loans, in conditions where certain
requirements are met and the death benefit is not allowed to lapse.
- Estate Taxes
The most common use of a survivorship death benefit is to help pay estate taxes.
Survivorship Life Insurance Policy is attractive to people who anticipate never
having enough assets to trigger estate taxes. This is due to its easier process
of qualification as compared to other traditional life insurance policies.
At Cheap Insurance Rates, we help you decide the best life insurance policy.
We also offer free online quotes for all types of insurance apart from second-to-die
life insurance – Term Life Insurance, Whole Life Insurance and Universal Life Insurance.
We also help you calculate the amount of life insurance that you may require.
For any further queries, please feel free to contact us.