Many couples are increasingly taking out the second to die insurance cover, and if you and your spouse are looking to buy a life insurance policy, then this is an option you want to consider. It is more recommended for those families that have a lot of property since it comes in handy when the need to settle estate taxes arises.
Furthermore, it is a way of ensuring that your children among other heirs are financially secure after both you and your spouse pass away.
Second to die insurance policy – a quick overview
Sometimes referred to as dual life insurance policy, this cover pays benefits to the beneficiaries, who in most cases are the children, only after the death of the last surviving spouse. To put this into perspective, the claim will only be paid when both parents have died. This is always considered as an efficient way of ensuring that your children remain financially stable and do not have to liquidate the estate to pay for accrued estate taxes.
Pros and cons of the second to die insurance
Before you find yourself a good insurance company to buy the second to die insurance policy, it is important to know some of the pros and cons of the cover. While the advantages of taking out the cover are many, it is also important to know the few drawbacks.
Pros
Low cost – Unlike many other individual insurance policies, the second to die is rather cheaper in terms of the premium rates paid. The time for the payment of the benefits is usually far into the future, depending on time, and this is why the rates are lower compared to the other policies.
Lenient underwriting – Because this policy covers both spouses, the underwriting requirements are favorable, especially for a couple where one is rendered uninsurable. For instance, if one has a severe health condition, they can still take out the policy for their children.
Estate protection – As explained before, this cover provides for the payment of the estate taxes that are due after the death of both spouses. As such, it ensures that the estate remains a property of the family for generations to come.
Inheritance – The other benefit attached to this policy is the provision of financial support to the surviving children. This can be especially important if the family has children with special needs that require substantial financing.
Cons
No alterations – Once you have completed the process of taking the second to die policy, you cannot make any changes to it. For this reason, it is crucial that you choose the right premium that your family can comfortably afford.
Couples with different ages – In the instance that one policyholder is younger than the other, they would pay more premiums than if they had taken other life insurance life policies.
Difficulty in forming a trust – Finding a trustee and establishing a trust is not an easy job. The second to die insurance is best if executed using a trust.
