Helping Clients Understand Survivorship Life Insurance

While life insurance is oftentimes used as a method of ensuring ongoing income and/or debt payoff for survivors, there are many, many other strategies where this financial tool can be an ideal fit. One is for estate planning purposes – and one type of coverage that is often used here is survivorship life.

What is Survivorship Life Insurance?
Survivorship life insurance policies are a type of policy that insures the lives of two people. Typically, the two insureds are spouses or partners. With survivorship life insurance, the two insureds are covered under one death benefit. This means that the benefits from the policy are paid out at the death of the second insured.

One of the primary purposes for using a survivorship life insurance policy is the payment of estate taxes. Survivorship life insurance policies are typically sold as permanent life insurance, which means that there is both death benefit protection and a cash value component.

There are a number of benefits to purchasing survivorship life insurance – starting with the fact that the policy will typically be less costly from a premium standpoint as compared to obtaining two separate policies.

A survivorship policy may also be less stringent with regard to underwriting than an individual policy. One key reason for this is because it is priced based on the joint life expectancy of both insureds.

A survivorship life insurance policy can, similar to other types of life insurance, also help policyholders to both build and preserve their estate. Similar to with individual life insurance coverage, though, the proceeds from survivorship life insurance coverage can still help to ensure that policy beneficiaries are covered for certain expenses once both of the insureds die.

Preservation of the couple’s estate comes in when the proceeds of the survivorship life policy are used for coverage some – or even all – of estate taxes that are due. This can be even more beneficial if non-liquid family assets would otherwise have to be sold – likely at below market value – to help with paying this tax obligation.

Where Can Survivorship Life Insurance Fit in Clients’ Overall Financial Planning?
Survivorship life insurance can provide a number of key benefits. For instance, individuals with estate planning needs often use survivorship life insurance policies as a strategy to pay estate taxes that will be due on the death of the second spouse.

These types of policies can also provide a nice financial benefit when a couple wishes to donate to a charitable organization. First off, because of its lower premium cost, survivorship life insurance can help provide more leverage to the donors’ charitable gift.

On top of that, the cash value component of a survivorship life insurance policy could even be used to send funds to the charity, while at the same time still allowing the death benefit proceeds to remain in place for an additional donation in the future.

Finding Clients for Unique Life Insurance Strategies
While life insurance can solve a countless number of needs, the first step in doing so is finding people who can benefit from them. That’s where we can help. If you would like to ensure that your prospect pipeline remains full – and in turn, have the opportunity to generate thousands of additional dollars in commissions each month – just give us a call at 1-800-643-6143 and we’ll give you all of the information you need to get started.

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Brian J. Kay, Executive Director, Leads4Insurance
921 Port Washington Blvd., Suite # 3 Port Washington, NY 11050
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