Doubling Up Coverage

Two is better than one, at least for some consumers who need life insurance. Survivorship life insurance is joint life insurance protection on the lives of two people.

How it Works

Survivorship life insurance pays its death benefit after the second person on the policy dies. This type of life insurance is generally less expensive than buying two individual life insurance policies for the same face amount, especially when one spouse is a high underwriting risk.

When it Works

A versatile product, survivorship life insurance can help meet a number of personal income protection challenges. When a cash benefit is needed only after the second person on the policy passes on, survivorship life insurance can:

• Provide a financial legacy to children and other loved ones;


• Leave money to a favorite charitable organization;


• Fund an irrevocable trust, from which beneficiaries receive distributions free of federal estate taxes; and


• Pay for inheritance taxes outright from the cash benefit.

Business Benefits

Family businesses and other closely held companies may also benefit from the utility of survivorship life insurance. In a business setting, this life insurance can provide the cash needed to pay estate taxes while successors take over the business.

When used for business purposes, you might work with a licensed financial professional and an attorney to pair survivorship life insurance with a succession plan and a buy-sell agreement. Family business owners may also consider life insurance as a way to equalize an estate for children or grandchildren who won’t participate in the business.

Term or Perm

Once you establish the need for insurance, you’ll typically get to choose either a term or permanent life insurance policy. Term insurance premiums will rise over time and simply offer the death benefit. Permanent insurance premiums will typically remain the same, as long as you make payments on time, and this type of policy can accumulate cash value.