About 60 percent of Americans hold some form of life insurance. Later in life, weighing different life insurance policies is an important consideration for married couples. As you undergo your estate planning process, it’s vital to consider a life insurance policy that will suit your unique circumstances. How Does Life Insurance Work? Life insurance ensures payment to beneficiaries should the insured individual pass away. Married couples have the option to either choose a separate insurance policy, which covers each spouse individually, or a joint insurance policy, which insures both parties. Of the joint insurance policies, there are two types: first-to-die insurance and survivorship life...
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Last-Survivor Life Insurance Last-survivor or second-to-die life insurance covers two lives under one policy. The death benefit is paid after the second person covered under the policy dies. Generally, premiums continue to be paid after the first insured dies. However, this type of policy may feature less expensive premiums than two individual policies, allowing the policy owner(s) the potential to buy a policy with a larger death benefit than might otherwise be affordable using separate policies. Last-survivor life insurance may serve several purposes. For instance, last-survivor life insurance can be used to increase the inheritance for the beneficiaries of a married couple with an...
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There is a lot to consider when it comes to estate planning and how to integrate life insurance. Without life insurance and an estate plan in place, your heirs are likely to experience many inconveniences ranging from court room battles among family members, arguments over custodial arrangements of minor children, and feuds between family regarding the distribution of your assets and more. We normally think of an estate plan as a set of instructions that will go into place once we pass. However, having a sound estate plan in place can also offer tremendous assistance should you become incapacitated. In this situation, it is vital to have someone who can make decisions for you as well as...
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Second to die insurance: A valuable tool for high net worth individuals Executives, business owners and other high net worth individuals are actively looking for ways to preserve their estates, not only for their family members, but also for charitable organizations. Based on his personal experience, Samuel R. Lee, an attorney at John Hancock Life Insurance Company and a licensed insurance counselor based in Dallas, says there are currently a large number of applications for survivorship life insurance in the business market alone, and brokers should take advantage of this opportunity. Survivorship life insurance, or "second to die" insurance, is a policy that insures the lives of two...
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Term Life Insurance: Term Life Insurance provides insurance for a set period of time, such as ten years, twenty years, 30 years, or up to age 65. At the end of that time period, a renewal may be available, but at a higher premium due to higher age. Because premiums escalate rapidly as you get into your sixties and seventies, these policies are most appropriate for clients who want coverage during their income producing years, and plan to let it expire after that. A $1,000,000 policy on a healthy 30n year old male might cost less than $23 per month. Ideal for: Family Protection during working years Short term needs to cover a loan Universal Life Insurance: Universal Life is ideal for clients...
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Second to Die Life Insurance – Concerns and Risks The second to die life insurance is a unique tool that only affluent policy holders can truly effectively carry and use to its fullest potential. It is a unique setup for insurance and for others, there really is not much sense to understanding second to die life insurance but as a consumer, being aware of your insurance options will give you a pretty good idea on how unique policies work and how they can benefit the ones who use them. The second to die life insurance is also known as a survivorship insurance. Traditionally, wealthy parents would use the second to die life insurance as a tool to help their children pay for the...
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When setting up a new life insurance policy, numerous factors must be considered. These factors range from who the beneficiary will be and how much the death benefits should be to the term length and more. Each person or family has unique considerations, so there is not a specific policy option that is suitable for everyone. As you compare the coverage types available, you may stumble upon survivorship life insurance. This type of policy is unlike other options that you may be familiar with in critical ways, so you should understand what is survivorship life insurance before you set up your new policy. What Is Different About Survivorship Policies? Survivorship life insurance is also...
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Life Insurance There are two primary uses of life insurance. The first is to provide a replacement source of income should a primary provider of income die. The second is to provide liquidity for the payment of estate taxes. Less common uses of life insurance include such functions as funding buy/sell agreements or other finite period requirements. Income Replacement The key characteristic of the use of life insurance for the replacement of income is that it generally covers a finite period and does not require permanent insurance. During the primary earning years of a person, two things should be occurring. One is that assets are being accumulated which could provide income in the future....
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Whole of Life Second Death policy Case study: We were recently approached by gentleman who asked us to review his life insurance. He was paying a considerable sum for a life insurance policy held jointly with his wife that offered a sum assured of £540,000. Their current policy term expires when he will be 80 and his wife will be 75 (they are currently 60 and 55 years old respectively). When asked for the reason for the cover, the client replied that the policy was arranged to repay the expected Inheritance Tax (IHT) bill. We pointed out that the policy has an end date and, as both he and his wife have a family history of longevity, they are likely to outlive the policy term. Secondly,...
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When people think about Florida estate planning , and most other states, most of the time their focus involves the legal estate planning documents that need to be put in place. However, there is another side to estate planning that involves various tools that can be strategically used to support your overall estate planning goals. One such tool is using life insurance for estate planning. It is important to understand how life insurance, wisely implemented, can compliment your estate plan or even provide critical support to prevent a catastrophe. All of this will be discussed in more detail to follow. When Life Insurance is Useful for Estate Planning There are many situations where...
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