When it comes to buying life insurances, there are different options out there that you can go
for. However, owing to the increasing demand for second to die insurance or survivorship
policy, it is important that you understand the insurance policy in and out. Therefore, before
committing, (please) read on for an overview of the what, the where and the why’s of second
to Die Insurance.
What is Second to Die Insurance?
Second to die whole life insurance or Survivorship life insurance policies are used by married
couples, paying out a death benefit after both die. This kind of policy is one that can be used to
pay off all estate tax at the death of the insurers. It is also an insurance policy that protest your
heirs’ future by passing all the partners inheritance to them.
Where Does Second to Die Insurance Come in?
Under normal circumstances, any parent would worry about what will happen to their children
when they die. It is normal to have such fears but ultimately it the action that you take that
carries the weight. If you have assets that you want your kids to inherit once you and your
spouse are gone, then choosing a second to die life insurance policy will ensure that they do not
blow up the inheritance way too fast.
however, most parents are worried that their children might be forced to sell the inherited
property just to pay off expensive estate taxes at the time of their parents’ death. So, most
parents ensure that this is something they address by purchasing second to die life insurance
Why is Second to Die Insurance a Cover you should Purchase?
Under state tax law, a marital deduction permits individuals to leave an unlimited amount of
assets to their surviving spouses, right? The advantage for this option is that provided youleave
all yourworldly-wise possessions to your spouse, no federal estate taxes will be owed at the
time of your death. However, those possessions then become part of the estate of the spouse
and in most cases, will be taxed once your spouse eventually dies. Good news is, the death
benefit from a second to die life insurance policy will help pay those taxes without stressing
your heirs about it.
Your heirs can pay estate taxes with the payout from your second to die insurance policy.
Assuming you don’t get covered by a second to die policy, your children might be forced to sell
your house or even liquidate all assets to pay off estate taxes. So, why leave the estate burden
(which happens to be quite expensive) for your beneficiaries to struggle with while you can
have it sorted while you are still alive?
Lastly, estate taxes should not be your only reason for purchasing second to die insurance. If
you have children with special needs, purchasing a survivorship insurance policy will be great.
This is because such a policy will basically look out for your kids in monetary ways after both
you and your spouse have died.