How Are Survivorship Life Insurance Policies Helpful In Estate Planning
Survivorship life insurance policies offer valuable assistance in estate planning by providing funds to cover taxes. These policies can also facilitate charitable donations, support children with special needs, and offer financial security to beneficiaries.
Unlike traditional whole, term, and variable life insurance policies, survivorship life insurance policies have unique components. This article delves into these aspects and explores how they benefit estate planning for everyone involved.
If you have any questions or need assistance, please contact our advisor at Sure Insurance. We are here to help you navigate your estate planning needs with empathy and expertise.
Survivorship Life Insurance Policies Explained
Survivorship life insurance is a permanent life insurance policy that covers two individuals, typically spouses, under a single plan.
This policy includes both a death benefit and a cash value component, and it is also known as second-to-die insurance or dual-life insurance.
The policy remains active until both insured parties pass away, provided that premium payments are made on time. It is often more affordable than purchasing separate permanent life insurance policies for each person.
Survivorship life insurance offers several financial benefits. Policyholders can use it to donate their assets to charities or good causes after their passing. It can also facilitate the smooth transition of a business if family members choose not to continue it.
Additionally, this insurance can provide ongoing support for a child with special needs. In such cases, you may be able to add a special needs trust to your policy.
Most importantly, survivorship life insurance helps policyholders preserve their assets by covering estate and federal taxes. This allows beneficiaries to receive the remaining estate and death benefit intact.
Contact our advisors at Sure Insurance for a consultation to help you secure your family’s financial future.
Our empathetic and experienced team is here to assist you in finding the best insurance solutions for your needs.
Estate Planning Defined
Estate planning involves organizing tasks to manage an individual’s assets in the event of incapacitation or death.
Contrary to common belief, estate planning isn’t just for those with substantial wealth. Everyone should consider it to safeguard their children, ensure their healthcare needs are met, and establish legal instructions if they become incapacitated.
Key elements of estate planning include:
- Naming guardians for minor children
- Appointing healthcare proxies for incapacitation
- Assigning a power of attorney
- Creating a financial plan that designates beneficiaries
Sure Insurance understands the importance of preparing for the future. Our advisors are here to help you navigate estate planning with empathy and expertise. Contact us today to secure your family’s future and gain peace of mind.
Survivorship Life Insurance and Estate Planning
Primarily, survivorship life insurance is utilized for estate planning purposes. Upon the passing of the first spouse, estate taxes are transferred to the surviving spouse.
Following the death of the second policyholder, the insurance funds can be employed to cover taxes on assets and benefit designated beneficiaries.
These taxes encompass settlement costs and probate fees commonly linked with transferring estates and assets to beneficiaries.
Survivorship life insurance has additional applications, such as:
- Charitable Contributions:
Policyholders can allocate a portion or the entirety of their death benefit to a charitable cause they cherish. These donations can be made as a lump sum or over an extended period.
- Supporting Disabled Children:
This insurance is vital for policyholders with disabled or special needs children. Ensuring their financial and physical security is a crucial aspect of estate planning.
- Business Transition Planning:
When transitioning a business from one owner to another, whether to a family member or another individual, survivorship life insurance can assist with the associated costs and provide support to the family of the deceased business owner.
For personalized advice and to secure your family’s future, contact our advisors at Sure Insurance. We are here to help you navigate the complexities of estate planning with empathy and expertise.
Survivorship Insurance Benefits
In addition to its significant financial advantages for beneficiaries and estate planning, survivorship insurance in Canada offers affordability, a cash value component, and the potential for customization.
- Affordability
Survivorship insurance covers two individuals under one permanent policy, extending its duration. This allows insurers to offer lower premiums for couples compared to individual policies.
For those comparing rates and inclusions for survivorship insurance in Ontario, Sure Insurance can provide detailed information on local options.
- Cash Value Component
Part of your premium payments goes into a cash value component, which can be accessed through withdrawals or policy loans for financial needs.
However, any withdrawals or loans must be repaid to avoid reducing the death benefit.
- Customizable
Survivorship life insurance can be tailored with additional features known as life insurance riders. These riders can include benefits like accelerated death benefits, long-term care, and living benefits, each with its own cost.
Some policies may include a living benefit rider, allowing access to a portion of the death benefit if diagnosed with a terminal illness.
For more information on how survivorship insurance can benefit you and your loved ones, contact our advisor at Sure Insurance for a personalized consultation. We’re here to help you secure your future with empathy and understanding.
Alternatives to Survivorship Life Insurance
We suggest consulting with a professional at Sure Insurance to explore survivorship insurance and its alternatives to determine the best fit for your needs.
Survivorship insurance is often mistaken for first-to-die insurance. The key difference is that first-to-die insurance provides a death benefit upon the first policyholder’s death, allowing the surviving spouse to apply for a new policy, typically within the first 60 days.
Options aside from survivorship life insurance include individual permanent or term life insurance policies for each spouse.
Other permanent life insurance types for individual policyholders are universal life, variable, and whole life insurance.
Term life insurance is generally more affordable than permanent policies, but its premiums are influenced by factors like age, health, and employment status.
It also has an expiration date, and renewal does not guarantee the original premium rate. Unlike permanent policies, term life insurance does not accumulate cash value.
If estate planning is your priority, Sure Insurance has the expertise to help you select the ideal policy for your estate and future.
Contact Sure Insurance today to speak with an advisor or schedule a consultation. We understand your needs and are here to help you secure your future.
Frequently Asked Questions about Survivorship Life Insurance Policies
What is Survivorship Life Insurance?
Survivorship life insurance, also known as second-to-die life insurance, is a type of life insurance policy that covers two individuals, usually a married couple, under one policy.
The benefit from this policy is paid out only after both insured individuals have passed away. This type of insurance is typically used as an estate planning tool to provide for heirs or to cover estate taxes and other financial obligations.
How Many Lives Does a Survivorship Life Insurance Policy Cover?
A survivorship life insurance policy covers two lives. It insures both individuals under a single policy, and the death benefit is only paid out upon the death of the second insured person.
This structure makes it different from individual life insurance policies that pay out upon the death of the insured person.
What is the purpose of survivorship Life insurance?
The primary purpose of survivorship life insurance is to assist in estate planning. Since the death benefit is paid after the second insured person’s death, it provides financial support to beneficiaries for handling estate taxes, debts, and other financial responsibilities.
This type of insurance ensures that heirs receive the necessary funds to maintain the estate and avoid the forced sale of assets. It is also often used to provide for the long-term care of dependents or to leave a charitable legacy.
How to Buy a Survivorship Life Insurance Policy?
Purchasing a survivorship life insurance policy involves several steps. First, you should evaluate your financial needs and goals, considering the long-term care of your beneficiaries and any potential estate taxes.
Consulting with Sure Insurance’s financial advisor to determine the right coverage amount. Next, you will need to compare different insurance providers to find a policy that offers favorable terms and premiums.Â
The application process typically involves providing medical and financial information for both individuals covered by the policy.
Once approved, you will need to sign the policy documents and pay the initial premium to activate the coverage.
Regular reviews of your policy with your advisor can ensure it continues to meet your needs over time.
