Joint Life Insurance Policy
Survivorship Life Insurance will prevent a large part of your estate from going to the IRS upon your death. Most couples carry individual insurance policies name the other as beneficiary; why not consider combing the two policies into one as the premiums on a joint life policy is much lower than the combined premium of the two. Estate taxes are part of life and death, however there are ways to conserve or at least replace a portion of your estate. One effective tool to help protect your net worth is a survivorship life insurance policy. This is an issue you need to be keenly aware of as a booming economy and inflation has multiplied millionaires 10 times over and you may be one of them. The last thing you want is for your heirs not to receive what you have worked so hard to provide as an inheritance for them; that is unless you consider Uncle Sam one of your heirs.
Let’s delve a little deeper into this scenario. You’ve worked hard and the family business is worth several million dollars and while the company is still in your name, the children now run it and will eventually inherit it. However, after you die, the children suddenly are faced with an estate tax bill of potentially up to a million dollars or more. If the company doesn’t have liquidity they may very likely have to sell all or a portion of the business just to pay the taxes. This is why 70% of family-owned businesses fail to make it to the second generation
Since Survivorship Life Insurance is similar to joint life insurance it is a little cheaper than purchasing two different life insurance plans. The major difference between survivorship life insurance plan and joint life insurance plan is that survivorship plan just pays out on the demise of the second spouse whereas joint plan just pays out only on the demise of the first spouse. Essentially, a joint life insurance plan is determined on providing coverage for the living spouse, whereas survivorship life insurance makes certain that there is a set aside death benefit for other recipients, perhaps the children.
In case you begin to consider a survivorship life insurance plan, just be certain you have adequate coverage for the living spouse following the death of the first spouse. But you might want to take into account a survivorship life insurance plan if you have a huge estate you would leave behind for your kids. A Survivorship Life Insurance plan is ideal to provide your heirs with the funds to cover the estate taxes that they will have to pay when you are gone. It will protect them from the indebtedness that could otherwise consume a substantial part of their inheritance. When selecting a life insurance plan choose one that will leave adequate wealth to cover final expenses and inheritance taxes.
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