Let’s look at a type of policy that might just be tailor-made for some estate planning goals and objectives. It’s official name is ‘survivorship life insurance’ and it doesn't pay its proceeds until the last survivor dies—that is, the surviving spouse. This is a real advantage for lower pricing. Another benefit to consider is the possible age difference and longevity of the female spouse. Since women far outlive men, this fact is also reflected in lower premiums. This means you can typically buy twice as much face amount in a survivorship policy as you could in an individual policy for the same money, which is important in estate planning scenarios. Some estates may have a greater need for liquidity at the death of the surviving spouse, and since affordability and cash flow are always major concerns, this strategy can help to keep these costs down.
You should have a "permanent" plan for survivorship policies. Consider either traditional universal life or equity indexed universal life. Universal life will allow the most benefit per dollar invested. When designed properly, it can provide for sufficiently strong guarantees without any waste by having any excess money in cash value. Be certain to talk with seasoned insurance professionals when considering this type of planning for you and your family.
Also, these policies pay out the much-needed funds exactly when typically required. Once the surviving spouse passes away, the estate is settled and distributed. This is when money is needed for a variety of reasons. For example, a family business. This type of life insurance might offer the solution of how to fund an inheritance for a child that is not involved in the family business. The proceeds from the life insurance policy can be used to 'buy out' that child, allowing the business to go to the other child who runs it. This highly-leveraged, tax-free payout provides families with a financial and estate planning tool that offers an affordable way to leave a large legacy for both their families and their favorite charities.
This might be the perfect time to evaluate a survivorship life insurance plan to see if it might offer your family with an affordable and workable solution as part of a comprehensive estate plan. Since our firm does not sell life insurance or any financial products for that matter, we can be of assistance to our clients as they weigh their options before they invest. Call to schedule your complimentary consultation on estate planning or register online for one of our seminars on topics of interest to seniors and their loved ones.
Reference: insurancenews.net (May 3, 2016) Survivorship Life Insurance Useful for Estate Planning