second to die life insurance


What is the main purpose of having second to die life insurance?

It is primarily used to cover the estate taxes that become due when the second spouse passes away. By using the leveraging ability of Life insurance to provide the capital to pay for Estate taxes that otherwise could substantially reduce the estate value as it is passed onto the heirs. Because two lives are being insured its possible to reduce the over all cost of the policy and also provide coverage when one spouse may not be insurable if they attempted to purchase a policy on their own life individually.

How Should the Policy be owned?

The ownership of a second to die life policy is very important. If the policy is not structured, funded or owned properly it could cause the policy death benefit to be included in the estate of the deceased insured. That would increase the overall estate and create a larger estate tax exposure. That's the complete opposite of what the typical second to die policy is designed for. Because you want to be sure that the policy has no incidence of ownership by the insured, most policies are owned by either family members or an irrevocable life insurance trust.

What if one of the insured individuals has a negative health history?

Because the death proceeds from the policy are not paid until the second person passes away, 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 do the policy premiums differ with a Second to Die Life Insurance Policy?

Because you are insuring two lives and no death proceeds are paid until the second insured passes away, the premiums tend to be lower than if one policy was purchased on the life of each insured.

What is the best way to go about purchasing a Second to die Life Insurance Policy?

Because the ultimate cost is based on the underwriting results obtained from the doctor records, interview and physical that needs to be done on the insured individuals, the final cost isn't known until the underwriters have reviewed all the material information. An illustration is provided prior to underwriting to give a best efforts estimate based on preliminary information provided to the agent. The best way to proceed with this type of policy purchase is to review an initial illustration and determine if the policy suits your needs and goals. If so, submit an application and go through the underwriting procedure. There is no cost for this and the only way to determine your true policy premiums.


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