November 14, 2023

Survivorship Life Insurance: Understanding Its Role in Estate Planning

Survivorship life insurance is an important component of estate planning that not everyone is familiar with. While you may understand how traditional life insurance policies work to safeguard your family’s future after your passing, survivorship life insurance serves a slightly different purpose. 

It provides a financial safety net for your loved ones after you “and your spouse” have passed away. 

In this article, we’ll review the basics of this type of insurance policy and answer frequently asked questions about how it can support your estate plan.

What Is Survivorship Life Insurance

Survivorship life insurance is a type of joint policy that insures two people and pays out a death benefit ONLY after the passing of both policyholders. 

Why Consider Survivorship Life Insurance for Estate Planning? 

Though every family is different, survivorship life insurance can be an invaluable tool for estate planning. Let’s review the following benefits it provides:

  • Because the policy covers you and your spouse, you may not need to take out two individual policies; therefore, it’s typically a cost-effective option for couples who want to leave an inheritance or provide for their heirs. 
  • The death benefit provided by a survivorship policy is generally not subject to taxes for beneficiaries. They can also use this money to pay for any estate taxes due after the second spouse’s death and any expenses related to probate or the administration of a trust that was established as part of the estate plan.
  • It helps ensure that your heirs receive an inheritance, even if most of your assets are tied up in a business or other non-liquid assets. 

Disclaimer: KTF does not provide tax advice. Please consult with a Certified Public Account (CPA) for questions about tax benefits related to survivorship life insurance or estate planning in general.

Can Anyone Apply for Coverage?

Typically, anyone can have survivorship life insurance as long as they meet the eligibility requirements of the insurance provider. However, survivorship life insurance is typically designed to support couples who want to provide for their heirs or leave an inheritance after both partners have passed away. 

How Do I Obtain Survivorship Life Insurance?

Experienced estate attorneys, like KTF Law Firm, can certainly assist with survivorship life insurance as part of your estate planning. We’ll provide guidance on whether this type of policy is appropriate for your goals and help you navigate the application process. 

Further, our team can help you structure the policy to meet your specific needs and ensure that it aligns with your overall estate plan. Remember, it’s always a good idea to work with an experienced estate planning attorney to ensure that your assets and loved ones are protected.

Do I Need This Policy If I’m Creating an Estate Plan?

Survivorship life insurance can play a critical role in your estate plan, but it may not be for everyone. Therefore, careful consideration of your goals, budget, and health status is necessary. 

Additionally, our estate planning attorneys can assist you in evaluating your options, so you make the right decision for your legacy and your family’s future. 

We can also ensure that your estate plan is legally binding and aligns with your final wishes, providing you with the peace of mind that your loved ones will be well taken care of after your passing.

To get started, we invite you to request a free consultation today! 

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