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Life insurance is about providing for those you leave behind. But if you’re married and both of you die, the estate rules change — which can leave a tax burden on your dependents. A survivorship policy can give peace of mind to those looking to leave a legacy or who need to care for family after both partners are gone.
Sometimes called second-to-die life insurance, a survivorship policy is typically used in estate planning to ensure the estate is preserved after a couple dies. Like permanent life insurance, most survivorship policies are designed to last your entire life and accrue cash value as you pay into it. That makes the policy a good way to leave a large, liquid cash asset to deal with estate taxes and other expenses after both partners die.
While a survivorship policy can be easier to obtain and less expensive than buying separate policies, this form of life insurance isn’t necessary for everyone.
Typically, insurers offer these options for survivorship life insurance:
Survivorship policies provide joint life insurance — most often for married couples — that only pays out once both policy holders have died. The couple pays one combined monthly premium to keep the policy active. When one partner dies, the surviving partner doesn’t get the death benefit, but the cash value can be used as collateral for a tax-free loan in case of emergencies. When the second partner dies, the death benefit is paid to the beneficiaries of the policy.
Yes. Every insurance company offers different options, and these are the best riders to protect both yourself and your spouse:
For most couples, it makes more sense to take out separate policies or joint policies that pay out to the surviving partner.
That being said, there are several scenarios where survivorship life insurance is the better choice:
If a survivorship policy isn’t the right fit, there are plenty of alternatives. These include:
Survivorship life insurance can be a less expensive joint insurance option for couples to remove the burden of taxes and expenses for their beneficiaries. However, there’s no survivor benefit and, without a rider, the policy remains in place even if you get a divorce.
For joint options that provide death benefits for the surviving partner or for separate policy options, compare other insurance products that may better suit your needs.
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