For Mark Roberts’ Use: As financial advisors, we often hear of individuals who allowed their term life insurance contracts to expire. Twenty or so years after selecting the policy, replacing it with a permanent life insurance plan might require a premium increase that feels uncomfortable.
But going without life insurance is an enormous risk of its own. Even if your children are grown, you might still have a spouse, debts that you would prefer to be covered, and of course, burial expenses. So you would probably prefer to maintain at least some form of life insurance protection.
Survivorship life insurance presents a unique solution for couples, and sometimes even business partners. The insurance policy covers the lives of both parties, with a death benefit paid only after the second individual passes away. Since premiums are based upon the lives of two people, with only one death benefit eventually paid, the rates can often be more affordable than a permanent life insurance policy for one person.
Occasionally, you or your spouse might be rejected for life insurance coverage as an individual. With survivorship life insurance, you might be able to obtain coverage together.
Since death benefits are paid only after you both pass away, survivorship life insurance is often best for couples who have adequate income in the event that one outlives the other. The eventual benefit can be used to cover any debts left behind, burial expenses, and leave a legacy for your heir(s).
Since a portion of the premium might go into a cash-value account (depending on the structure of the policy selected), it is sometimes possible to withdraw the cash value after the death of the first party. Of course, this does reduce the final death benefit, but the cash value portion of the policy might offer you additional security and peace of mind.
For more information on survivorship life insurance, how it works, and potential tax benefits or drawbacks, let’s discuss the issue at our next meeting. We can help you understand how this unique type of life insurance works, and decide whether it might be a good fit for you and your spouse.