Survivor life insurance insures the lives of two people, usually a husband and wife. Its other names included “second-to-die life insurance” and “joint survivor life insurance.” It doesn’t pay until the second person dies. Survivorship life insurance can be beneficial in many different situations. For example, a couple with a special needs child may choose survivorship insurance to ensure financial security in the event of the second parent’s death. Alleviation of Estate taxes might be another purpose for a survivor policy. In this case, when the second person dies, the estate goes to the children and has estate taxes, which the policy provides money to pay.
Premiums on the second-to-die policies are normally more inexpensive than the cost of two separate policies. This is because there’s only one death benefit to pay. Additionally, most companies offer easier underwriting on the health of the individuals and consider the health of both. If one person is ill and the other healthy, it’s doubtful both will die sooner than average. Trusts often own the policy when used to provide money for a handicapped child or estate taxes. This way, there’s no estate tax on the money from the policy.