subject: Types of Survivorship Life Insurance – Reviewing Two Types of Survivorship Life Insurance [print this page] Types of Survivorship Life Insurance Reviewing Two Types of Survivorship Life Insurance
There are two common types of survivorship life insurance. The first type is whole life and the second is universal life. Both types of life insurance cover both spouses in a marriage. Both have to die before the policy pays out. This is a simple way to handle estate taxes. A spouse can leave everything to the other spouse without incurring estate taxes. However, when the surviving spouse dies, the estate taxes will come due. A survivorship policy will cover those taxes and preserve the estate for the heirs. It is also a good vehicle for providing financial assets to support a special needs child. This is becoming a popular option for anyone who needs to provide for dependents after they die.
The first type of survivorship life insurance is the whole life policy. As with other permanent life insurance policies, this type of insurance provides death benefit coverage throughout the covered persons lives. It also has an accumulating cash value that the policy owner can use for loans or eventually surrender it for cash. There are several subtypes of these policies such as the non-participating, participating, indeterminate premium, economic, limited pay, single premium, and interest sensitive.
The second type of survivorship life insurance is the universal life policy. This type of insurance gradually accumulates value as the policyholder makes premium payments. This type of policy offers flexibility in making premiums. Sometimes the policy grows at a fixed rate determined by the insurance company. Other policies have a growth rate tied to a particular interest rate index. These policies come with different premium options. The policyholder can pay a single premium up front. Another type comes with a fixed premium amount. Another type comes with the flexible premium amount.
The couple that is looking into survivorship life insurance should consider every type of policy before investing. It should be part of a comprehensive estate planning strategy that involves tax and estate planning professionals. Speaking with an insurance broker is only the first step in determining the right type of insurance policy for your needs. Survivorship insurance is a great way to offset estate taxes. It simplifies estate planning because both spouses have coverage. That means the surviving spouse doesn't have to worry when the first spouse passes. These policies are usually more affordable that individual policies, especially when one or both individuals are not in good health. Consider all your options when looking at estate planning vehicles
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