What Does Second-To-Die Life Insurance Mean To You
First, let’s define Second-to-Die Life Insurance. It is used to decrease the overall cost of a life insurance policy and/or offer funds to cover things such as estate taxes when they are due, typically at the death of the second spouse. These life insurance policies are also frequently used in conjunction with other financial means such as a trust account set up to replace a gifted asset for heirs.
The life insurance policy premiums can be paid using a portion of the income generated from a trust. There can be many other purposes for second-to-die life insurance; from covering taxes to setting aside monies for charitable purposes after death. The difference between these policies and other types of policies it that these second-to-die policies will cover two people rather that just one. Typically, a husband and wife will the individuals who purchase this type of insurance coverage.
The life insurance policy will not pay out until both parties have passed away. This type of insurance can be helpful if one spouse has health issues that prevent them from obtaining life insurance coverage any other way. And, since two lives are insured rather than the one life policy, the cost of premiums can be considerably lower. This coverage is generally only beneficial to couples who expect to leave a large estate behind and there is generally a minimum amount of coverage that can be purchased.
Uncovering Benefits of Second-To-Die Life Insurance
Besides benefiting from the possibility of lower policy premiums, there are several other benefits from purchasing second-to-die life insurance. Qualifying for these types of policies are relatively easy. One reason for this is that the risks that are associated with insuring two individuals are regarded to be a great deal lower than simply insuring one person.
Before selecting coverage of this nature, a client would be wise to receive counseling from both an estate planner and an insurance agent.