Second-to-die life insurance policies are typically popular among married couples. The goal of this insurance policy type is to ensure that the benefits of the policy are transferred to the beneficiaries of the policy when the last policyholder passes on to the afterlife.
A second to die policy is often sought after by middle income and upper-middle-income families to set up the means for proper estate planning. It is also used to set up or offer monetary support to ILITs (or Irrevocable Life Insurance Trusts).
More details about this life insurance policy type are mentioned in the sections below –
How Do Second To Die Life Insurance Policies Differ From General Life Insurance?
Most of the time, when a person applies for a life insurance policy, they nominate their partner or a relative as the beneficiary of the policy if the policyholder passes on due to an accident, medical condition or due to natural causes.
This is not the case with a second to die life insurance policy.
A second to die policy can be applied to married couples only. If a spouse dies, the surviving partner will not be able to get any benefits from the policy. The benefits are available only to the children of the couple when both partners have passed on.
Benefits Of Second To Die Life Insurance Policies
There are many benefits in store for applicants who choose second to die life insurance policies. Some of them are mentioned in the sections below.-
It Is A Cost-Efficient Life Insurance Policy
Unlike generic life insurance policies, the premiums for the second to die life insurance policies are quite affordable. The reason is simple – the premium is calculated based on the overall life expectancy of the couple. Furthermore, as the benefits of the policy will not be passed on to the beneficiaries unless both policyholders have passed on, insurers keep the premiums for such life insurance policies cost-efficient.
It Is Easy To Qualify For A Second To Die Life Insurance Policy
The qualification criteria for a second to die policy are simple. Even if one of the two policyholders is not in their best health, it won’t matter and the policy will be sanctioned. The reason is simple – the primary term for this policy type is that both policyholders would need to pass before the benefits can be paid to the beneficiaries.
It Can Be Used For Estate Planning
Most of the time, second to die life insurance policies helps the policyholders to build their estate and at the same time, keep the same protected from the tax bracket.
A second to die life insurance policy is also a great investment option for the policyholder. It allows the applicant to pass on lump-sum amounts to their children. This policy type is also ideal for people who want to ensure that the money they are passing down to their children is tax-free. Second to die life insurance policies also allow policyholders to leverage the assets they currently own in a bid to maximize their wealth. For more details, one should consult with the officials at their preferred insurance company as soon as possible.