survivor estate / second to die life insurance:

A 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.