When Second-To-Die Coverage is More Beneficial than Individual Life Insurance

For those planning to take out a survivorship or second-to-die life insurance policy, there are several benefits involved. The main benefit is that the policy insures both parties without the need of purchasing separate insurance. People who have businesses, real estate or other hard assets especially benefit from this type of coverage, because such assets can be very difficult to try to sell following the death of one of the parties. There are six important benefits to understand about these types of policies. Qualification is easier. In comparison with other individual types of life insurance qualification rules, it is easier to obtain second-to-die coverage. This is because insurers are less likely to make a decision based on one person’s health, and the risk is also spread. People who are older will find that it is easier to take out this type of policy. Also, business owners who have been denied individual coverage are more likely to be approved for this type of policy due to insurable interest and a second covered party. There is tax relief. Most people who purchase these policies are married couples, and they purchase this type of coverage to make sure the other receives enough payment to offset the estate tax liability. This coverage is best suited for people who have estates exceeding $2 million, and it is also useful to anyone with an estate consisting mostly of illiquid assets, real estate or business interests. Premiums are less expensive. If two people are insured under one policy, the insurer is able to spread the risk two two people. As a rule, premiums are about 50 percent less than an individual policy. In addition to this, the premiums are paid annually instead of monthly or quarterly. For those who are looking for policies to simply cover the cost of an estate, the policies are not expensive. An agent can provide a tax estimate based on individual details. There is a charitable trust option. These policies provide an effective way to set up trusts for heirs and charities in a cost-effective manner. It is best to choose a policy that suits a loved one’s needs as well as individual needs. For example, a person with a disabled child would be able to set up the policy so that the child would still receive the needed funds after the death of the policyholder. Policyholders have more control over their assets. With the right policy, a person could have the ability to control asset distribution and timing. For those who have concerns about family members’ spending habits, this is especially helpful. It provides liquidity to heirs. Without this type of policy in place, heirs could lose assets instead of keeping them. If a person has a second-to-die policy, it will ensure the assets are distributed to the intended heirs instead of being used to pay off the estate’s debts or final expenses. In a way, this type of policy can be considered a creditor-sheltered asset. There are other benefits associated with these policies. To learn more about second-to-die life insurance, call the experienced team of professionals at ACBI at 203-259-7580 or visit our website.

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