How Does a Second to Die Policy Help You in Securing The Future of Your Family?
20 Jul 2018
Throughout our lives, we try to make life happier and easier for the ones we love. Second to die permanent insurance policy is just another way of ensuring that our loved ones are not at their wits ends when they suffer a terrible loss. It is a permanent life insurance policy that does not pay out in the event of the death of the first holder. It covers two people under one policy, and the plan only pays after the demise of the last insured. To many, it may seem counterintuitive, but in critical situations, like we are about to discuss here, second to die policies are beneficial.
You have a lot of property and assets
A survivorship insurance policy is useful for high net worth families. When you are the owner of a considerable estate, you know for sure that your death will bring a burden of state and federal taxes upon your family. A survivorship insurance policy helps to pay for all kinds of estate taxes, and it also helps the rest of the family retain the property and assets. It levies the burden of great estate taxes in almost all states of the USA.
You need insurance for two
Buying separate life insurance for two individuals is costlier than getting insurance for the two people under a survivorship policy. Since the latter does not have to pay until both insured parties pass away, the risk is statistically less as compared to a regular life insurance policy. It results in more cost-effective premiums in case of a second to die insurance policy.
You will qualify easily
Since the risks involved are much lower, the qualifying criteria for the second to die policies are quite lenient. It includes age requirements, health conditions, and medical history. Since the company only has to pay when the second insured dies, they only focus on the healthiest and the youngest of the two potential holders. It usually results in a premium payment that can be up to 30% to 40% lower than regular health insurance or life insurance policies.
You want to keep your estate intact
When you have expansive property, the chances are that after your passing your heirs will want to sell off parts of it to save themselves from the brunt of high estate taxes. Federal and state death taxes can be quite cumbersome, and it has resulted in several broken estates. Many people just sell off their assets to prevent all the future commotion. However, if you do not want all that to be a part of your “afterlife”, you should opt for a second to die policy. This policy can pay your estate taxes, business interests and death taxes upon your death.
You can start building your estate
Many families can begin building their property from scratch with their first survivorship policy. These kinds of policies often offer incredible returns because of the low risk involved in the process. So, buying such a plan during your lifetime can help you start building an estate for your future generations. We have seen several grandparents and parents buy second to die policies to secure a legacy for their heirs.
You can pre-manage your family owned business
When a family-owned company is a part of the estate you are trying to leave for your heirs, matters can become a little more complicated than you desire. Having an estate plan and a survivorship policy as a part of that estate plan can help you divide the shares of your family owned, and family runs businesses among your children or grandchildren. This way you can be sure that the heirs who are not interested in your company will not have to brave the unpleasant task of running the business. A second to die policy can split the estate and business up to ensure that all the heirs get equal shares, but all shares are not the same! This way you will never have to worry about one son or one granddaughter who might sell off the business to an outsider to merely shrug off the responsibility.
In some instances, we have seen marital changes affect the policy adversely. In case of marital changes that happen after the plan is in place, the premiums do not change. Even in case of death of one spouse and subsequent remarriage, the surviving spouse has to pay the premiums. Although the new spouse may not be overly excited about spending premiums of a policy that in no way involves them or their heirs, there are no exceptions for marital changes. It is something you must extensively consider before opting for a second to die policy in the future.