Explanation of Survivorship Life Insurance

Survivorship life insurance is also known commonly as second to die life insurance and joint life insurance. No matter what you call this type of policy, the details remain the same. Generally speaking, survivorship life insurance is a policy that ensures the lives of two people as opposed to one. In most cases, the two people insured are spouses. This type of survivorship life insurance policy the death benefit is not paid to the beneficiary until both parties pass. Life insurance companies sell survivorship life insurance as either a universal or whole policy insurance.


The main benefit of survivorship life insurance is its affordability. Most consumers find that buying this type of coverage is much cheaper than two separate policies. When both parties are interested in leaving money to a designated beneficiary, exclusing their spouse, it makes perfect sense.

The biggest reason that survivorship life insurance will not pay out until the second person dies is simple: this type of policy is primarily designed to help pay estate taxes. Most people who turn to survivorship life insurance are wealthy and are looking for a better way to manage their estate. Many people have used survivorship life insurance for other reasons, such as leaving enough money behind to care for a special needs child.

Another big benefit is that in most cases, it is easier to qualify for survivorship life insurance than an individual policy. Since both policyholders must pass before the benefits is paid, life insurance companies are less worried if one of the two policyholders is in bad health.

Before you Buy

Just like any type of insurance, there are several questions that need to be asked before making a purchase. One of the first things to figure out is how the policy will work in the event of a divorce. Additionally, what will happen if changes are made to the current estate tax laws? Some providers offer a rider that allows you to split a survivorship life insurance into two individual policies in the event of a divorce.

It is also important to remember that estate will be taxed both on a state and federal level. The estate may also owe tax on everything from a retirement plan to a tax deferred plan. Very often, the taxes are considered estate or inheritance tax.

If you are interested in buying survivorship life insurance it makes sense to work with an attorney that specializes in estate planning. Although the basics of survivorship life insurance are easy to understand, an attorney can help you sift through the facts to see whether or not you should buy a policy. Life insurance can be a somewhat difficult to understand because most policies sound the same. You can hire an attorney to help differentiate the drawbacks and benefits of different types of policies to buy the policy that is right for your specific requirements.

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