In “Survivorship Life Insurance Useful for Estate Planning,” Insurance News explores how this kind of policy works in an estate plan to benefit heirs or to help make a charitable donation. As the name implies, proceeds are not paid until the last survivor passes—typically a surviving spouse.
This is a real advantage for lower pricing. In many marriages, another benefit to consider is the benefit to a female spouse. Statistically, women tend to outlive men and this fact is reflected in lower premiums, meaning you could buy twice as much face amount in a survivorship policy as you could in an individual policy for the same amount of money. That’s important in estate planning scenarios. Typically, we need to have very large dollar amounts when it comes to death benefits, which in turn, means higher premiums. Affordability and cash flow are always major concerns, so this strategy can help to keep these costs down.
You should have a “permanent” plan for survivorship policies. Consider either traditional universal life or equity indexed universal life. Universal life will allow the most benefit per dollar invested. When designed properly, it can provide for sufficiently strong guarantees without any waste by having any excess money in cash value. Be certain to talk with seasoned insurance professionals when considering this type of planning for you and your family.
Also, these policies pay out the much-needed funds exactly when they are most needed. Once the surviving spouse passes away, the estate is settled and distributed. This is when money is needed for many reasons.
When the value of providing highly-leveraged, tax-free benefits is considered, many individuals opt for this financial and estate planning tool as an affordable way to leave a significant legacy for both their families and their favorite charities.
This type of insurance policy can serve as a cornerstone to an estate plan. When correctly designed and implemented with the guidance of experienced professionals, they can provide an affordable solution for estate planning needs. However, you should work closely with your estate planning attorney to ensure the beneficiary designations on you insurance policies are aligned with your estate plan. If they’re not, much of that advance planning could go to waste.
For more information on the importance of aligning, verifying and tracking your assets, explore our website and contact us to schedule your consultation today!
Reference: insurancenews.net (May 3, 2016) Survivorship Life Insurance Useful for Estate Planning