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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 people. The death benefit is not rewarded to the beneficiary until after the second individual insured passes.
Generally, on second to die policies, the costs are actually cheaper because the carrier is not paying a claim or a death benefit until two people have died, says Brian Pearson, senior vice president of Austin, Texas-based Madison National Life. There's actually less risk for the insurance carrier, he adds.
"It's an incredibly powerful tool for the right client and right situation," says Tony Brant, a MassMutual financial professional with Skylight Financial Group in Cleveland. "It is not talked about as much as it could be. It does take some planning - legal and tax work as well as highly customized tailoring for the situation."
Second to die and regular life insurance plans
Two individuals can sign up for a second to die life insurance policy and also have two separate life insurance policies "as long as the employer/plan sponsor offers the two plans," says Michael Lackey, vice president of New York Life. "We offer all of our whole life options on a traditionally underwritten basis through our payroll deduction program. Additionally, we offer individual employee whole life through our simplified or guaranteed issue underwriting plans."
Many different forms
Survivorship policies can be written in the form of a whole life, universal life or variable universal life contract, an indexed universal life policy or term insurance,...