Survivorship Policies: Filling a Need

A survivorship policy—also called a second-to-die policy—can be a valuable estate-planning tool. It* insures two lives, typically a married couple (or business partners), with the death benefit paid out after the second person's death.

The Strategy

The unlimited marital deduction allows one spouse to leave an unlimited amount of assets to the surviving spouse without owing estate or gift taxes. The assets become part of the survivor's estate at the first spouse's death. When the second spouse dies, proceeds from the life insurance policy are available to pay expenses.

Cost Advantages

Because the premium on a survivorship policy is based on the joint life expectancy of the insured, the cost may be significantly less than the cost of buying two single-life policies. Qualifying for a joint policy may also be easier since the survivor will continue to pay the premiums, and the death benefit isn't paid until the second spouse dies.

Multiple Uses

A survivorship policy is often purchased by couples who want to preserve more of their wealth for heirs. Additionally, survivorship policies can be used to:

• Provide support for a special needs child after both parents have died.


• Leave a legacy to support a charitable organization.


• Provide the funds needed to pass on a family business while providing cash value for heirs that aren't involved. The policy also can help fund a buy-sell agreement upon the death of a business owner.

Survivorship policies are often used in conjunction with a trust. Talk to your financial and legal professionals for more information.

*Applications for life insurance are subject to underwriting. Insurance coverage exists only if the premium is paid to put the policy in force. Accessing cash values may result in surrender fees and charges and may require additional premium payments to maintain coverage, and will reduce the death benefit and policy values. Guarantees are based on the issuer's ability to pay claims.