For several decades now, many wealthy people would often purchase a second-to-die life insurance policy to protect the value of their estate.

However, many families are no longer responsible for any estate taxes because of the recent increase in the federal estate tax exemption.

A husband and wife can now each get their own exemption of $11.4 million, meaning a couple will be able to give away $22.8 million tax-free in 2019.

Families once needing a second to die life insurance policy to pay for burdensome estate taxes are now looking at these policy’s as wealth transfer vehicle.

Even though the reason for owning a second to die policy may have changed, these polices have a new found popularity because of lower pricing and better plan design.

Many older 2nd to die polices focused on cash value accumulation and are relatively expensive because of an extended period of low interest rates.

Furthermore, second-to-die life insurance purchased decades ago, normally did not have a guaranteed premiums like the policies which are issued today.

So, should I keep my current second to die policy?

Our guide to understanding second to die life insurance will help you with your decision by answering a few common questions.

What is a second-to-die life insurance policy? Why older second to-die polices may have problems? How to evaluate the performance of your current survivor policy? What are the advantages of buying a new policy? How much will a second to die life insurance policy cost your family? Which companies offer the cheapest second to die life insurance quotes?

What is a Second-to-die Life Insurance Policy?

Here is quick refresher course!

A second-to-die life insurance policy is set up to insure married couples, and does not pay out until the surviving spouse eventually dies.

A second-to-die life is commonly known as “survivorship life”, “SUL insurance”, and “joint survivor life insurance”.

Second-to-die life insurance is usually part of estate plan or can be used as part of a wealth transfer strategy.

Life Insurance for Estate Planning – Many very wealthy families buy second to die coverage because their estate is so large that it will eventually create an estate tax problem.

A survivor policy provides liquidity to avoid having to sell off everything at fire-sale prices to pay federal estate taxes owed after both spouses pass away.

The death benefits from a survivorship universal life insurance will provide immediate cash to pay any estate taxes which are due.

Many wealthy families should also consider an Irrevocable life Insurance Trust if the total assets in your estate will exceed the current 2018 exemption amounts.

If you think your estate is going to eventually create a tax problem, we always suggest reading our article called survivorship life insurance protection.

Life Insurance for Wealth Transfer – A 2nd to die policy also allows moderately wealthy families the opportunity to leverage current assets to maximize their total net worth.

This allows wealthy couples to contribute a manageable premium to eventually pay out a much larger death benefit to pass down to their children.

So, if your goal is to pass down the maximum amount to your children, a survivor policy can be excellent long term investment.

If you are interested in evaluating whether a policy could be part of wealth transfer strategy consider reading using a second to die life insurance policy as an investment. We will evaluate rate of return of the life insurance policy compared to the rate of return on other family investments such as stocks, bond, and real estate.

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