How to use this tool
How to use this tool
Is There Still a Need for Second-to-Die Life?
by Roger Wohlner (Write for us!)
(Click on the links within the article to get definition of that word)
(Click on the links within the article to get definition of that word)
Survivorship life insurance policies, also known as second-to-die life, insure two lives, with the insurance proceeds paid after
the death of the second insured. This insurance is often used to provide financial liquidity to pay estate taxes after the death of the second spouse. But with the repeal of the estate tax slated for 2010, is this insurance still needed?
Until 2010, the estate tax still exists. So unless you're positive you and your spouse won't die before then, you may still have a need for this type of insurance. After that, the estate tax will be eliminated in the year 2010, only to be reinstated in 2011 based on 2001 tax laws. Further legislation is required for permanent estate tax repeal, definitely not a certainty at this time. Thus, if you currently own second-to-die life insurance, you probably wouldn't want to cancel it until these issues are resolved. Whether you need to obtain a new second-to-die insurance policy is a more difficult decision.
Besides using these policies as a means to fund estate taxes, you may find them to be appropriate in other circumstances, including:
Although not suitable for everyone, survivorship life can be an attractive planning tool to meet specific needs.
Until 2010, the estate tax still exists. So unless you're positive you and your spouse won't die before then, you may still have a need for this type of insurance. After that, the estate tax will be eliminated in the year 2010, only to be reinstated in 2011 based on 2001 tax laws. Further legislation is required for permanent estate tax repeal, definitely not a certainty at this time. Thus, if you currently own second-to-die life insurance, you probably wouldn't want to cancel it until these issues are resolved. Whether you need to obtain a new second-to-die insurance policy is a more difficult decision.
Besides using these policies as a means to fund estate taxes, you may find them to be appropriate in other circumstances, including:
- Business owners wishing to leave the business to one child can use the policy proceeds to provide for children not involved in the business.
- The proceeds can be paid to a favorite charity, so the charity receives a substantial contribution without depriving heirs of estate assets.
- If both parents work, a second-to-die life insurance policy can ensure minor children are adequately provided for in the event both parents die.
Although not suitable for everyone, survivorship life can be an attractive planning tool to meet specific needs.
Email this Article
Print this Article
Cite this Article
Other Suggested Articles
Life Insurance 101 >
Determining the Right Amount of Insurance for You >
Life Insurance Don'ts >
Life Insurance: Types of Policies and Provisions >
Coming to Grips with Life Insurance >
Buying Life Insurance: How Much is Too Much? >
Borrowing Against a Life Insurance Policy >
The Basics of Life Insurance >
How Much Life Insurance Do I Really Need? >
Common Insurance Mistakes We All Make >
Other Articles By This Author
How Much Insurance Do You Need? >
Protect Your Financial Identity >
Watch for Slowing Growth >
Coming to Terms with Stocks >
Make Your Resolutions Work >
Stretching Your Salary >
Why Is Asset Allocation Important? >
Signs It's Time to Sell a Stock >
Are Federal Deficits a Concern? >
Tips to Maximize Your Financial Aid Reward >
Article reprinted with permission. Unauthorized reproduction of this content is prohibited.
Click here to license InvestorGuide University content.
Click here to license InvestorGuide University content.
