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Life insurance is a way to take care of your loved ones after you pass on, but there is a special reason to purchase Second to Die life insurance. The purpose of Second to Die life insurance is simple: to provide for estate tax payments of non-spouse heirs over and above the estate tax exemption.

Tax law is complicated, but your reasons for buying Second to Die life insurance are not. The bottom line is that estate tax liability can be absolutely devastating to what you leave behind, especially when your family inherits a family owned business. If you don’t plan your estate properly, your heirs may end up liquidating the very business you worked your entire life to build, just to pay the taxes!

One question you should ask as you are looking at life insurance options is whether the premium on a Second to Die life insurance policy would be cheaper than a individual universal life insurance policy. Because Second to Die life insurance covers two people instead of one, the premiums tend to be lower in general. That being said, for high-net-worth individuals in their twenties and thirties, especially where one spouse is the principal earner, a single life policy often makes more sense. This is because life insurance premiums on younger people are often low anyway.

In many estate-planning situations, a Second to Die life insurance policy is used in conjunction with an irrevocable trust. An irrevocable trust is a vehicle to permanently hold assets for heirs of the estate. Once the policy is placed in the trust, it cannot be touched by the policyholder. Under special circumstances, however, the policy holder’s spouse may be able to access limited funds.

It’s easy to qualify for a Second to Die life insurance policy, because the payout on the policy is delayed until both insured parties die. Life insurance is a morbid business, but there are perks to the way it works. In this case, even if one spouse would otherwise be considered “uninsurable” by a life insurance company for a traditional single life policy, they may still be covered by a Second to Die life insurance policy because the other spouse is also covered.

If you are considering purchasing a Second to Die life insurance policy, make sure that you consult with an insurance specialist or an estate planning attorney before investing. They can help you consider all the benefits and drawbacks of such a plan.
TermLifeInsurance.com provides information on second to die insurance and more. Visit TermLifeInsurance.com forfree quotes on life insurance policies.