Survivorship Policies: Filling a Need

A survivorship policy — also called a second-to-die policy — can be a useful estate-planning tool. A survivorship policy insures two lives, typically, a married couple (or business partners), with the death benefit paid out after the death of the second person.

The Strategy

The unlimited marital deduction allows one spouse to leave an unlimited amount of assets to the surviving spouse without owing estate or gift taxes. At the death of the first spouse, the assets become part of the survivor’s estate. When the second spouse dies, proceeds from the life insurance policy are available to pay expenses.

Cost Advantages

Because the premium on a survivorship policy is based on the joint life expectancy of the insured, the cost may be significantly less than the cost of buying two single-life policies. Qualifying for a joint policy also may be easier since the survivor will continue to pay the premiums, and the death benefit isn’t paid until the second spouse dies.

Multiple Uses

A survivorship policy is often purchased by couples who want to preserve more of their wealth for heirs. Additionally, survivorship policies can be used to:

• Provide support for a special needs child after both parents have died.


• Leave a legacy to support a charitable organization.


• Provide the funds needed to pass on a family business, while also providing cash value for heirs that aren’t involved in the business. The policy also can help fund a buy-sell agreement upon the death of a business owner.

Survivorship policies are often used in conjunction with a trust. For more information, talk to your financial and legal professionals.

Applications for life insurance are subject to underwriting. No insurance coverage exists unless a policy is issued and the required premium to put it in force is paid. Accessing cash values may result in surrender fees and charges and may require additional premium payments to maintain coverage, and will reduce the death benefit and policy values. Guarantees are based on the claims paying ability of the issuer.