We typically utilize life insurance to mitigate a variety of risks ranging from loss of income to estate liquidity. For the latter, permanent policies tend to be more effective so that the insurance lasts through one’s whole life rather than a specific term. These policies can be used to pay for estate taxes, leave an inheritance, or to have cash readily available so that a family can keep a business, vacation home, or other asset. There are various forms of permanent coverage including Universal Life, Whole Life, and Second to Die policies.
A Second to Die policy insures two lives rather than one. These types of policies are typically less expensive than two separate policies because both insureds must die before the death benefit is paid out. In addition to being cheaper, underwriting may be easier which may provide an even bigger benefit to one spouse who may have pre-existing health issues. Lastly, these types of policies may offer more control in how the money is paid out and to whom.
As always, we recommend a thorough review of your life insurance needs and exploring all options available when applying for a policy. Depending on your goals, a second to die life insurance policy may be a useful tool however, the pros and cons as well as the cost should be fully explored beforehand.