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This article has been published with permission of the Author Michael
Wallman.
You can locate Michael online with the Canseco Financial Group @ Raymond
James Financial Services at
http://gayfinancialadvisors.com/Florida.htm
Survivorship
Life Insurance
Benjamin Franklin wrote "in this world, nothing can be
said to be certain, except death and taxes." Unfortunately, in the area of estate planning, both of these
factors must be considered for couples with larger than average estates.
One useful financial planning tool to cope with this eventuality is
survivorship life insurance.
Survivorship life insurance is frequently known as dual life
or second-to-die insurance. This
type of policy pays a death benefit upon the death of the insured who
lives longest. Thus, it is a
handy tool to help provide heirs with necessary funds to meet sizable
estate tax bills.
Coverage premiums for survivorship life policies are based on
joint life expectancies. Therefore,
it is frequently possible for this premium to be less than the total of
two policies on the same individual lives.
Of course, such premiums would vary based on the ages and health of
the insured. There must be an
insurable interest present in survivorship policies such as a
husband-wife, parent-child, or business relationship.
These policies can also take the form of a variety of traditional
or interest-sensitive products to be tailored to the individual situation.
Survivorship life can be very effective to provide
much-needed liquidity for a couple with a combined estate in excess of
$2,000,000 in 2002 who take full advantage of the unlimited marital
deduction. This is especially
true when the spouse most likely to die first will leave behind a large
illiquid estate problem, such as the presence of a family-owned business.
Without another method of providing liquidity, the family business
might have to be sold off to pay estate taxes.
Other scenarios prime for survivorship life insurance might
be where both spouses are over 65 or one is uninsurable and the other is a
reasonably good risk. Without such a policy, individual policies may make
insurance in these cases cost prohibitive.
Another common application for survivorship life is for younger
professional couples with children. In
the event that one parent should die, the family is still left with one
parent for financial support.
Of course, these policies are not one-size-fits-all and
should be compared carefully with the advantages and aggregate death
benefit provided by two separate life policies.
This comparison and eventual policy choice should be made with the
aid of a financial planning and/or life insurance expert.
This article has been published with
permission of the Author Michael Wallman.
You can locate Michael online with the Canseco Financial Group @ Raymond
James Financial Services at http://gayfinancialadvisors.com/Florida.htm
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