Most Americans know their families need life Insurance. We’ve all heard of term and whole life insurance because they happen to be the most popular and frequently discussed types of coverage available, but what about the other specific kinds of policies? If you stumbled across this article it means that you want to know more about Survivorship Life Insurance and you will be glad to know that you have come to the right place! Whether you are a married couple, a business partner, a physician or lawyer, or a high-income earned entrepreneur, you have the complete right to know what you might or might not be getting into as far as type of life insurance. In this article, we will be discussing what survivorship life insurance means, the pros and cons of survivorship, what it means when someone says first or second to die life insurance, and term vs whole vs survivorship life insurance. The following are some key points of this article;

1. A survivorship life insurance policy, or second-to-die life, insures two lives but instead of the policy paying out to the beneficiaries when one passes away a survivorship life insurance policy pays out when the second insured person dies.
2. Most people buy a life insurance policy to protect their loved ones and to provide an income replacement if one of the two were to pass away. Second to die life insurance is something for people who either don’t have children or their children are all grown up and don’t necessarily need to give them your death benefit because they are already on their two feet. This type of policy may also be used by affluent couples as a hedge against estate taxes for their heirs. The death benefit is separate from the estate and is not subject to estate or income tax, this is ideal for those who have a high income or high net worth.
3. Unfortunately, you will come across articles that state they sell first to die life insurance policies but in all reality, no carrier offers first to die life insurance. So since it isn’t offered by any carrier we will skip this subject and move on rather than give you information of this type of life insurance and have you all confused.
4. When you are looking to buy life insurance you will notice that not many life insurance products allow you to have both you and your spouse under the same policy which can result in having to buy two different policies. If you are looking for something inexpensive to insure two individuals then survivorship life insurance is the pony you should ride.
5. There are a couple of cons that correlate with survivorship life insurance. Its first drawback is that if the surviving partner is not the bread winner and the breadwinner spouse dies then the surviving spouse will not receive any funds that are needed. When purchasing any kind of life insurance policy, you should consider the short-term benefits as well as any long-term issues. 
6. Keep in mind that a survivorship life insurance policy is a form of permanent life insurance so you can add on policy riders like you would for a traditional whole or term life policy. The best part about survivorship and its riders is the rider that allows your surviving partner to access cash value as collateral to receive low-interest loans, but the unpaid loan balance will ultimately be deducted from the death benefit. 
7. A spendthrift clause is something that is optional in many second to die life insurance policies. A spendthrift clause allows you to set up a payment plan, releasing the policy’s payout over time rather than having to pay all at once.

What is survivorship life insurance?

When you think of survivorship life insurance imagine a life Insurance Policy that doesn’t necessarily pay off when you die. A survivorship life insurance policy, or second-to-die life, insures two lives but instead of the policy paying out to the beneficiaries when one passes away a survivorship life insurance policy pays out when the second insured person dies. A survivorship life insurance policy, also known as second to die life insurance, is a joint permanent life insurance policy that is able to cover two people. Guaranteed universal life insurance is a typical choice for this type of coverage. Indexed universal life insurance can be a good option for those considering second to die policies.

Second to Die Life Insurance explained

Like we mentioned earlier, survivorship life insurance is also known as second to die life insurance. Back in the day, everyone called survivorship life second to die life insurance. Most people buy a life insurance policy to protect their loved ones and to provide an income replacement if one of the two were to pass away. Second to die life insurance is something for people who either don’t have children or their children are all grown up and don’t necessarily need to give them your death benefit because they are already on their two feet. This type of policy may also be used by affluent couples as a hedge against estate taxes for their heirs. The death benefit is separate from the estate and is not subject to estate or income tax, this is ideal for those who have a high income or high net worth.

First to Die Life insurance explained

Unfortunately, you will come across articles that state they sell first to die life insurance policies but in all reality, no carrier offers first to die life insurance. So since it isn’t offered by any carrier we will skip this subject and move on rather than give you information of this type of life insurance and have you all confused.

Survivorship Life Insurance Pros (Second to Die Life)

When you are looking to buy life insurance you will notice that not many life insurance products allow you to have both you and your spouse under the same policy which can result in having to buy two different policies. If you are looking for something inexpensive to insure two individuals then survivorship life insurance is the pony you should ride.

Many times we have had clients get denied for different reasons such as their health condition, age or hazardous occupations, but we lead them to survivorship life insurance and they couldn’t be happier.

Survivorship life insurance as we mentioned before provides affordable coverage for two individuals but not only that, this is also a useful tool in estate planning for married couples and privately-held businesses who are anticipating significant estate taxes. You can use a survivorship life insurance policy to create an irrevocable life insurance trust.

If you have children you may want to speak with them and see if it makes sense for them to help you pay for your second to die life insurance policy. The money provided by your children will weigh as a leverage provided by life insurance and will create a great return on investment.

If you are a business owner you may want a survivorship life insurance policy for business succession. This is a good idea for those looking to fund a buy-sell agreement where both spouses own a portion of a business.

Survivorship Life Insurance Cons

There are a couple of cons that correlate with survivorship life insurance. Its first drawback is that if the surviving partner is not the bread winner and the breadwinner spouse dies then the surviving spouse will not receive any funds that are needed. When purchasing any kind of life insurance policy, you should consider the short-term benefits as well as any long-term issues.

In some situations, you may just not want a survivorship policy on its own but you may prefer to add a rider to another life insurance policy. This is a good option if you want to receive cash value benefits. You should talk to your life insurance agent about your options so you can make an informed decision about a policy versus a rider.

What about a Rider?

Keep in mind that a survivorship life insurance policy is a form of permanent life insurance so you can add on policy riders like you would for a traditional whole or term life policy. The best part about survivorship and its riders is the rider that allows your surviving partner to access cash value as collateral to receive low-interest loans, but the unpaid loan balance will ultimately be deducted from the death benefit. Determining the right policy for you should be done after carefully evaluating all the options, and understanding the full implications of a possible policy can be done much more easily with the help of an experienced agent.

What is a “spendthrift clause”?

A spendthrift clause is something that is optional in many second to die life insurance policies. A spendthrift clause allows you to set up a payment plan, releasing the policy’s payout over time rather than having to pay all at once. This is a great option for those who do not feel the recipient of your life insurance policy payout and are financially responsible for receiving a large sum of money all at once. Beneficiaries cannot borrow from the funds or even assign the proceeds to creditors or lenders. As a downfall to this option is that if by any chance dies before the total sum is paid out the remaining money may get lost in the system, in other words, gone with the wind.

Term life insurance vs Whole life insurance

When purchasing a survivorship rider, you will have to determine which type of policy to add it on to your term or whole life insurance. Whole life policies are a form of permanent life insurance that provides coverage for your, you guessed it, WHOLE life. Whole life policies offer cash value build up with a fixed rate of return, however, because of all these benefits, it tends to cost 3 to 10 times more than term insurance. If you choose to do a whole life policy you will be able to use the cash value during your lifetime as security for loans.

Term life is a form of temporary life insurance that only provides coverage for a short and specified period of time. This time length is usually between 5 to 30-years and once your term life insurance policy expires you either have the option of renewing it annually (your premiums will increase drastically) or with most carriers you will be able to convert into a permanent life insurance policy. Term life insurance is the most affordable type of insurance and most applicants choose a 20 to 30-year term policy to last until their retirement or when their children are out the house where they become financially independent.

Let Us Help!

In conclusion, today you became well versed in Survivorship life insurance and what the pros and cons are with this kind of insurance. Whether you decide to buy a survivorship life insurance policy or decide that path isn’t for you, you should still shop around for some quotes. What one life insurance carrier offers may not be the same of what another life insurance carrier may offer. That’s why as a consumer it is in your best interest to shop around for quotes. If you have 30 seconds you should go below this article and fill out our super easy and simple quote engine. This way you can see what highly rated insurance companies have to offer for you and while you look at those quotes you can also compare them at the same time. Or you can simply utilize our FREE service by calling us and letting us guide you into finding the best life insurance company for you and your family. We will search among our 60 top rated companies until we find the best fit company who reflect your specific needs, health, and lifestyle. After we find the best insurance company we will also fill out the application for you, and if by any chance down the road you want to change your policy or add on riders, we are one call away because we offer a lifetime guarantee of help when it comes to your life insurance. Don’t wait for tomorrow when you can get it done today, give us call so you can spend more time with the ones who matter most, your family.

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