If you own a wealthy estate and are looking into purchasing life insurance, but worry about the estate taxes being too high for your family to take care of when you die, there is hope out there. A second to die life insurance policy, also known as survivorship life, can help. That’s because second to die life insurance policies don’t pay out until the second insured person on the policy passes away. In many cases, the death benefits from the policy are meant to be used on outstanding taxes, so with the proceeds of your policy, your beneficiaries will not have to scramble to sell the estate or your possessions, in an attempt to pay the bills once you are gone.
With second to die life insurance, if you die and leave all your worldly possessions to your spouse, they will not owe any federal estate taxes — at least not yet. Those possessions become part of the surviving spouse’s estate, which will then be taxed after he or she dies. Business partners even look into getting second to die life insurance policies, due to the estate tax ramifications involved.
Perks of a second to die policy
If you’re seriously considering buying a second to die life insurance policy, be sure to fully understand the ins and outs of it. Know that if you have a small estate, or even a large one at that, you may still be able to avoid or reduce estate taxes by getting solid-estate planning advice. An estate-planning attorney may be helpful when considering a second to die policy. Also, it is important to consider and know the consequences of the “what ifs”-- What if you get divorced? What if estate tax laws change? Some companies will offer a rider to help split the policy, others don’t, so be sure to ask and fully understand what you’re signing into before you actually sign the contract.
If you are interested in getting a life insurance quote log on to Insurance.com. Here you will be able to evaluate multiple rates from best-in-class life insurance providers – helping you find the best life insurance coverage to help cover your estate, and your needs.
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