A survivorship policy pays out only after two people pass away.
Why does that matter? For many families, it doesn’t. They need more traditional forms of life insurance that protect income for their spouses and children.
But there are specific situations where survivorship insurance might be critical for your legacy. Read on for the advantages of survivorship insurance!
First, survivorship insurance can be an invaluable tool for estate planning. If one spouse dies, they can pass their assets to their spouse without facing federal estate taxes.¹ Not so for wealth left to future generations! For some couples with substantial assets to pass on to children, survivorship can leave a sizable death benefit that can offset the cost of estate taxes.²
If this strategy appeals to you, reach out to an attorney and a financial professional. You’ll need their help to get your estate in order and navigate your state’s tax system.
Second, survivorship insurance can cover ailing or elderly couples. As a rule of thumb, survivorship insurance is a good option for those who don’t qualify for term or permanent life insurance due to health or age. That’s because the rates are based on two life expectancies, potentially lowering rates and increasing your likelihood of qualifying.³ This is especially useful if the couple has children who are still dependents or will need special care.
In conclusion, survivorship insurance can be a powerful tool for specific people in specific situations. That’s why it’s best to collaborate with legal and financial professionals to make a decision that will be right for you and your family.
¹ “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance
² “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance
³ “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance