Founder, Abrams Insurance Solutions, Inc., San Diego, CA
A joint life insurance policy (also called a survivorship policy or second-to-die policy) is coverage on two lives. This is often used in estate planning when a policy will cover both the husband and the wife. At the death of the second person, the death benefit is paid to the heirs.
The cost for the policy can be significantly less, because the insurance company knows that with a survivorship policy, the death benefit will most likely pay off years later than a non-survivorship policy. Another advantage of survivorship policies is that one person can be uninsurable.
Some survivorship policies offer a first-to-die rider which pays out a portion of the death benefit at the first death.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
What is a joint life policy? This is usually a policy on a husband and wife that pays on the second death. More often than not, these policies are used to create a money pool for the payment of estate taxes. I think there are also some joint policies that have been adapted for business partnerships as well.
The marital deduction act was the basis for creating joint life insurance or survivorship insurance. The marital deduction act allowed married couples to pass assets between them at the death of the first spouse. Survivorship was created to pay the federal estate tax at the second death of a married couple, coinciding with the marital deduction act. Survivorship policies have several actuarial formats like participating whole life, variable universal life, indexed universal life, current assumptions universal life.
.JPG){kind=avatar}
The cost for the policy can be significantly less, because the insurance company knows that with a survivorship policy, the death benefit will most likely pay off years later than a non-survivorship policy. Another advantage of survivorship policies is that one person can be uninsurable.
Some survivorship policies offer a first-to-die rider which pays out a portion of the death benefit at the first death.