Pros and cons of joint survivorship life insurance
There are several advantages of a joint survivorship policy, including these pros:
- Estate planning: A survivorship life insurance policy can help in estate planning as a means of leaving money and assets behind while potentially accessing some tax advantages. Consult a tax advisor to understand the tax implications of survivorship life insurance.
- Creating an inheritance for heirs: A joint life insurance policy can be a way to leave a nest egg for your heirs to claim once you and your partner have passed away.
- Providing care for permanent dependents: If you and your partner have a permanent dependent, a survivorship policy can be used to provide for them once you’ve both passed.
- Two individual policies are too expensive: A survivorship policy can be more affordable than getting two individual permanent life insurance policies, potentially allowing you to purchase more coverage than you’d otherwise be able to.
- Trouble getting a policy: If one of you is having trouble qualifying for life insurance due to your age or health, a survivorship policy can be a way to get coverage or to increase the coverage you’re eligible for. That’s because both policyowners will be factored into your eligibility rather than just one.
- Partner can use cash value: While the death benefit can’t be paid out until both people on the policy have died, the surviving partner can tap into the policy’s cash value, if needed, via a life insurance loan.
Second-to-die joint survivorship policies aren’t for everyone. The cons of survivorship life insurance include:
- One death benefit: Survivorship policies might not be the choice for couples in good health who can afford the premium for two separate policies. Separate policies allow for the payment of two death benefits, one after each policyowner dies.
- Partner can’t be a beneficiary: If you’d like to use life insurance to provide for your partner when you die, you’ll need to get separate life insurance policies or a first-to-die joint life policy since survivorship policies require both insureds to pass away before paying out.
- Life changes over time: Joint life policies can be difficult to update in cases of divorce or other significant life changes. When shopping for a survivorship policy, consider asking if it will be possible to split the policy in such instances.
How are joint life insurance policies helpful in estate planning?
A joint life insurance policy can be an effective estate planning tool. The insureds can name their estate or a trust as the beneficiary of the policy. In this way, the death benefit can pay off remaining debts, estate taxes and other final expenses so as to preserve the value of the estate. Be sure to consult a tax advisor to better understand the tax implications of joint life insurance.
Joint survivorship life insurance is a permanent cash value policy, which pays a death benefit to beneficiaries, and is best suited to those who want lifelong coverage. A joint life policy can be an effective estate planning tool, a way to help cover long-term care, and leave a legacy for your heirs.
Choose joint life insurance with the death benefit that meets your needs
You can get life insurance quote online by answering some questions and exploring your options for death benefit amounts, and other issues related to the lifelong coverage of whole life insurance. Call 1-866-912-2477 to speak with a licensed, Progressive Life by eFinancial representative who can help you choose the best policy for your goals.
