Second to Die Life Insurance

Life insurance offers comprehensive protective coverage to safeguard policy holders - and their loved ones - in the event of a death or catastrophic illness. While death is inevitable, its timing may be unexpected; and on average life insurance policies are most effective in protecting minor children, widowed parents, and surviving spouses in the event of a premature death. Should a death occur, a life insurance policy will provide financial payout to the surviving benefactors according to the terms created by the policy holder.

The terms of a life insurance policy are something that most of us give only momentary thought to at the time of the policy purchase. But beyond these initial decisions, life insurance terms are something to which most of us give very little thought, as our own mortality - and the mortality of those we love - is hardly something on which we wish to dwell.

This self-imposed ambivalence has left most of us with only a rudimentary understanding of the life insurance options available to us; most of us only familiar with the generalities of term and whole life insurance.

So it's unsurprising that so many consumers are less familiar with an option available to them in protecting their families - second to die life insurance.

Second to Die Life Insurance - A Whole Life/Universal Life Policy

First and foremost, a second to die life insurance policy falls under the umbrella of a whole life insurance policy - an insurance policy that is in effect throughout the life of the policy holder and does not require renewal. The policy holder pays a yearly premium in exchange for this coverage.

But while a typical whole life insurance covers only one policy holder, second to die life insurance covers two policy holders at once – in most cases a married couple. The second to die life insurance policy looks at the two policy holders almost as if they were one insured person in that one premium is paid on the policy and the policy will not be paid until both policy holders are deceased.

The Benefits of Second to Die Life Insurance

There are a number of benefits of a second to die life insurance policy, including:

Affordable Premiums. Second to die life insurance policies generally provide policy holders with lower premiums than traditional whole life policies.

More Lenient Underwriting. For those with medical conditions that may be questionable for life insurance approval, second to die life insurance can be enormously advantageous. Because the policy is based on two policy holders and will only pay out when the second policy holder passes away, it is not essential for both insured to be in excellent health.

Estate Taxes. If your estate - all that you own - is worth enough at the time of your death it may be subjected to an estate tax, which means that a good portion of all that you have worked for will be owed to the government in the form of taxes; an absolutely inconceivable thought for those who have worked hard all their life in the hopes of passing on an inheritance to their family. However, with second to die life insurance, policy holders can account for this tax in their policy planning, helping to offset the burden for their families. In essence the life insurance payout will ensure that beneficiaries are able to still have their inheritance even after the estate tax is paid.

Federal Estate Tax Rates

*The likelihood that these rates will stand is uncertain with congressional and presidential elections in the near future. Most tax professionals advise their clients to plan upon a death tax in the range of 40 to 50%.

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