What is a Second-To-Die Policy?
A Second-to-Die policy, sometimes referred to as Survivorship Insurance or Joint-Life Insurance, is an insurance policy that insures the lives of two people and pays the policy’s beneficiaries upon the death of both insured individuals. This policy is most frequently purchased by married couples seeking to secure their estate for their children.
Because Second-to-Die policies only provide benefits after the death of both policyholders, these policies tend to be cheaper than a comparable Individual Life Insurance policy with similar benefits. These plans are especially desirable for couples where one of the individuals is in poor health. People who face large Life Insurance premiums, or who are not able to purchase Individual Life Insurance at all, can be insured in a Second-to-Die policy.
How Does a Second-to-Die Policy Ensure the Future of my Estate?
Under federal tax law*, you are permitted to leave an unlimited amount of personal assets to your surviving spouse, allowing you to postpone estate taxes until after the spouse’s death. This is where Second-to-Die insurance comes into play.
Let’s say you leave a house, an investment property, or even a business for your children. If they don’t have the capital to foot the tax bill, then they will be forced to liquidate some, or all, of your assets in order to pay the taxes. With a Second-to-Die policy, however, this problem is solved. A majority of Second-to-Die policies are designed to pay the beneficiaries an amount equal to the amount your estate will be taxed.
A Second-to-Die policy from First Community Insurance and Annuity Center gives your beneficiaries the means to pay off your estate taxes without having to liquidate the personal assets you’ve worked hard to attain. And because the policy insures more than one person, you’ll also enjoy a lower premium, and the total cost of the insurance will be cheaper than the estate taxes your beneficiaries will be liable to pay.
Due to the specialized nature of Second-to-Die insurance, some limitations may apply. It’s important to discuss your options with an insurance specialist from First Community Insurance and Annuity Center to determine the right amount of coverage for you and your family.
If you would like to learn more about a Second-to-Die policy, contact us today.
*Federal income tax laws are complex and subject to change. Neither Nationwide nor its representatives give legal or tax advice. Please consult your attorney or tax advisor for answers to specific questions.