Survivorship life insurance is most commonly used to insure married couples or business partners because it provides coverage for two individuals for a lower cost than two separate life policies. There are two types of survivorship policies which are first to die and second to die life insurance. Survivorship coverage is available in whole, modified whole, and term life insurance policies.
First To Die Life Insurance
A first to die life insurance policy pays the death benefit when the first insured person on the policy dies. It can be used by business partners to provide funds for the surviving partner to buy out the deceased partner’s business interest and cover other expenses that may arise from a partner’s death. Married couples may use first to die survivorship life insurance to provide the surviving spouse with money for extra living expenses that may arise after the first partner dies.
Second To Die Life Insurance
Second to die life insurance does not pay the death benefit until the second insured person dies. This type of policy may be used by affluent couples as a hedge against estate taxes for their heirs. The death benefit of a life insurance policy is separate from the estate and is not subject to estate or income tax. A spouse that inherits does not have to pay estate taxes so estate taxes are only due after the death of the second spouse. Family owned businesses also use second to die survivorship life insurance to provide funds to cover estate taxes.
It is less expensive to insure two individuals under a survivorship policy than with two separate life policies. In cases where one spouse or partner may not be able to get life insurance due to a health condition or age, it may be possible to get a survivorship life insurance policy, especially a second to die policy. Survivorship life insurance provides affordable coverage for two individuals and is a useful tool in estate planning for married couples and privately held businesses which anticipate significant estate taxes.
Since first to die policies are terminated when the death benefit is paid, the surviving partner is left without life insurance and may have to purchase a new policy. Second to die survivorship life insurance is not a good choice if the surviving partner needs funds from a life insurance benefit to pay living or business expenses when the first partner dies. The surviving partner can use the cash value of a whole life policy for low interest loans, but the unpaid loan balance is deducted from the death benefit leaving heirs without enough funds to cover taxes.
Term vs. Whole Life Insurance
Whole life insurance policies have higher initial rates than term insurance, but part of whole life premiums are diverted into a savings feature called the cash value. Policyholders can use the cash value during their lifetime as security for loans, and whole life insurance is permanent and does not expire. Term life insurance is temporary and expires at the end of the specified term, usually between 10 and 30 years, so policyholders may have renew the policy or find a new policy at significantly higher rates. Term life quotes can be found at www.TermLifeInsuranceQuotes123.com.
Modified Whole Life Insurance
Traditional whole life insurance policies have a fixed premium that never increases, but modified whole life policies have a lower initial premium that increases at specified intervals. A modified whole life policy may be a good choice for a growing business since the increasing income of the business should keep pace with the increases in survivorship insurance premiums. Young married couples may choose a first to die modified whole life insurance policy since their income is also likely to increase.
Compare Life Insurance Quotes
One way to decide if survivorship life insurance is the right choice is to compare the rates and policy provisions of different types of policies. LifeInsuranceQuotesOnline123.com offers free, instant life insurance quotes from multiple insurance companies. Couples and business partners can compare the rates of individual policies and different types of coverage and options to find the insurance company that best suits their needs and budget. Survivorship life insurance can be part of a financial plan that ensures the continuation of a family or business even if a partner dies.
To further help consumers find the best rates on their insurance, we recommend that you speak with your current car insurance company. Because auto insurance is required in the United States and companies offer multiple-policy discounts for their existing customers, the first provider you should speak with is the one offering your car coverage. Additionally, affiliation with alumni groups, credit unions, and even an AARP membership can help you get lower car insurance quotes. One insurance company we recommend checking out for AARP insurance is TheHartford.com. Visit them to get free quotes online and see how much you can save by switching to another auto insurance carrier.