For several decades now, many wealthy people have often purchased a second-to-die life insurance policy to protect the value of their estate.
However, many families are no longer responsible for estate taxes because of the huge tax exemption.
This has put many people with enormous estates in a state of flux with their estate planning.
Of course, many moderately affluent families also buy these survivor policies to transfer wealth tax-efficiently to their children.
Even though the reason for owning a second-to-die policy is often changing, these policies have newfound popularity because of lower pricing and better plan design.
Furthermore, second-to-die life insurance purchased decades ago is relatively expensive and often does not offer guaranteed premiums like the policies issued today.
So, should I keep, cancel, or buy a new second-to-die policy?
Our guide to understanding second-to-die life insurance will help you decide by answering a few common questions.
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What is a Second-to-die Life Insurance Policy?
A second-to-die life insurance policy is set up to insure married couples and does not pay out until the surviving spouse dies.
Second-to-die coverage is known as survivorship life, SUL insurance, Joint Life Insurance, and joint survivor life insurance.
A second-to-die life insurance policy is often purchased to pay estate taxes or as a tax-free wealth transfer strategy for affluent families.
Life Insurance for Estate Planning
Life Insurance for Estate Planning Many wealthy families buy second-to-die life insurance for estate planning purposes because their estate is so large that it eventually creates an estate tax problem.
Under current federal tax law, a marital deduction permits you to leave unlimited assets to your surviving spouse.
If you leave all your assets to your spouse, no federal estate taxes are due at death.
However, when those assets become part of the spouse’s estate, there might be estate taxes to pay when your surviving spouse dies.
A husband and wife can each get an exemption of $$13.61 million, meaning a couple can give away $27.22 million tax-free in 2024.
However, these higher lifetime exemption limits are only guaranteed to last until the end of 2025, dropping to approximately $6.2 million.
So you do not get hit with a surprise federal estate tax bill, we recommend always planning ahead of time.
If you think your estate will eventually create a tax problem, a survivorship policy can help pay these burdensome taxes.
Many wealthy families often do more advanced estate planning using Dynasty Trusts and Irrevocable Life Insurance Trusts funded with life insurance.
Find a qualified life insurance agent and estate planning attorney to execute these ideas.
We suggest reading this survivorship life article to learn more about this complex estate planning strategy.
Survivorship Life Insurance for Wealth Transfer
Survivorship Life Insurance for Wealth Transfer A 2nd to die policy also allows moderately wealthy families the power to leverage current assets to maximize their total net worth.
Wealthy couples can contribute a manageable premium towards a life insurance asset that eventually pays their children a more significant death benefit.
So, a survivor policy can be an excellent long-term investment if you aim to pass down the maximum amount to your children.
If you are interested in evaluating whether a policy could be part of a wealth transfer strategy, consider reading using a second-to-die life insurance policy as an investment.
We will evaluate the rate of return of the life insurance policy compared to the rate of return on other family investments such as stocks, bonds, and real estate.
Life insurance for Special Needs Children
Life insurance for Special Needs ChildrenLife insurance is an essential consideration for any family but can be especially important for families with children who have special needs.
If something happens to one or both parents, having life insurance can provide financial security for the child and help ensure they continue receiving the care they need.
Survivorship life insurance ensures that you’re leaving money behind so a special needs child can be taken care of when both parents pass away.
In many cases, the policy funds a special needs trust or irrevocable life insurance trust to provide income to the child if both parents are no longer around to help them.
Second to Die Life Insurance Rates
Second to Die Life Insurance Rates
Second To Die Life Insurance Quotes
- Select Lifetime
- Select Amount
- Press Get Quote
If you need reasonable rates and lifetime coverage, we strongly recommend comparing plans offering contractually guaranteed premiums for your entire lifetime.
So, with this in mind, we have provided you with a quick premium sample for contractually guaranteed survivorship universal life.
Second to Die Life Insurance Quotes by Age
| Ages | Premium | Death Benefit |
| 60/60 | $10,100 | $1,000,000 |
| 65/65 | $13,200 | $1,000,000 |
| 70/70 | $18,200 | $1,000,000 |
| 75/75 | $24,100 | $1,000,000 |
Second-to-Die Insurance Problems
Second-to-Die Insurance Problems Did you purchase a second-to-die life insurance policy many years ago?
You may have received a letter from your insurer claiming that your second-to-die life insurance policy has problems because it’s not performing as originally illustrated.
Policyholders getting these notices must contribute additional premiums to prevent their second-to-die life insurance coverage from lapsing sooner than initially projected.
So, how did this happen?
Flexible premium life insurance policies were popular in the 1990s, but many companies still sell them today.
Second-to-die life insurance purchased decades ago usually did not have a guaranteed premium.
When you contribute premiums, the insurance company deducts expenses, including the cost of the death benefit. The rest of the money stays in the policy cash value, earning interest to help pay future fees.
If interest rates changed, the risk fell on the insured to make up the difference in premium.
Unlike whole life’s guaranteed cash value, flexible premium survivorship life has a fluctuating interest rate on the money contributed towards the cash value.
During the 1990s, last-to-die policies were sold with projections assuming an interest rate between 6% to 12%.
Second-to-die life insurance policies sold during this time of historic double-digit interest rates are now crediting much lower interest rates.
The insurance company’s investment returns could not keep up with the premium projections as interest rates fell.
With the government keeping interest rates low for decades, most policies have been crediting closer to a 3% interest rate.
This is the lowest interest rate most insurance companies can credit and is the minimum guaranteed interest rate.
This extremely long period of low rates has caused a shortage in policyholder cash values, requiring additional payments to maintain coverage.
Many popular insurance companies say they had to reduce interest payments on second-to-die life policies when yields in their investment portfolios dropped.
Now, many policyholders are getting statements that their cash value is spiraling downward, which increases premiums and can cause policies to lapse before your life expectancy.
According to Forbes, this has surprised many wealthy families that were unaware that their policy could eventually lapse.
Insurers designed these policies around the false promise that solid investment earnings would keep these policies in force for your entire lifetime.
Fixing Second-to-Die Insurance Problems
Fixing Second-to-Die Insurance ProblemsAll second-to-die life insurance policyholders receive an annual statement showing how their policy performs.
You should pay special attention to your policy’s cash value performance.
Your survivorship life illustration will contain a current interest rate and the minimum interest rate column.
If your cash value is decreasing, it is time to take action!
Here is how!
Many policyholders make a more educated evaluation by contacting a life insurance specialist to conduct a policy audit.
A life insurance specialist is an agent familiar with many second-to-die life insurance policies.
Here is our two-step process:
1. Evaluate your current second-to-die policy
First, the specialist will work with your existing life insurance company to evaluate “in-force” illustrations with your current second-to-die policy under different scenarios.
- What is your current cash value?
- How long will the policy last if you keep paying your current policy premiums?
- How much would additional premiums be needed to maintain your current death benefit until you reach your target age?
- How much would a smaller death benefit cost?
2. Looking into New second to die Coverage
Next, a market study will determine if a newer policy could benefit you.
New policies are also medically underwritten, so it is essential to determine if you both can qualify before getting any second-to-die life insurance quotes.
Okay, we are both in decent health. Now, what are my options?
1. Transfer Cash Value Into New Life Insurance
Your first option would be to transfer the cash value of your existing policy using a 1035 tax-free exchange.
Following the 1035 exchange rules, you can directly transfer the money from your old policy into a new guaranteed SUL contract.
This strategy could reduce your future premiums or provide a limited payment policy while eliminating potential taxes by surrendering your policy.
Illustrations will be created on the new guaranteed premium policy by transferring your existing policy’s cash value.
2. Cash Out, Buy New Coverage
In this case, you can withdraw any available cash surrender value from your current 2nd to-die policy.
You can keep this money where it hopefully can be invested for better returns!
Illustrations will be developed on the new guaranteed premium policy for the death benefit you require without using your policy’s cash surrender value.
Your new policy’s premium and death benefit will be contractually guaranteed not to change for your entire lifetime.
Remember that not every life insurance company offers these new guaranteed plans.
The contractually guaranteed premiums eliminate many smaller companies, which lack proper cash reserves to honor these long-term commitments.
Now, you need to decide the best option for you!
Depending on your age and overall health, you have just a few options to consider:
- Keep paying your current premiums
- Reduce the death benefit to make the cash values last longer
- Contribute additional money
- Exchange the policy for new coverage
Working with a knowledgeable insurance agent when making these decisions is always advisable.We can help you review your current policy or find new coverage that meets your needs and budget.
You can kickstart your exploration of second-to-die life insurance by using our calculator to receive initial quotes.
We’ll sift through offerings from premier insurers to uncover the most suitable options for you.
Keep in mind, that these preliminary estimates might need tailoring to perfectly align with your unique circumstances.
For a customized plan and further guidance, feel free to reach out at 877-249-1358 or complete our online form.
Second To Die Life Insurance Quotes
- Select Lifetime
- Select Amount
- Press Get Quote
Second-to-die Die Life Insurers
Second-to-die Die Life InsurersFor those in need of guaranteed second-to-die life insurance policies, choosing a financially stable insurer is crucial.
Rating agencies provide valuable insights by grading insurers based on their financial strength and ability to pay claims.
We simplify the process of finding life insurance by tracking a network of highly rated companies.
Here’s our curated list of insurers offering competitive quotes for second-to-die policies.
These firms boast outstanding ratings from reputable organizations such as the Better Business Bureau, AM Best, and J.D. Power, ensuring reliability and peace of mind for policyholders.
| COMPANY | BBB | AM Best | JD Power |
| American General | A+ | A | 718 |
| John Hancock | A+ | A+ | 739 |
| Lincoln Financial | A+ | A+ | 744 |
| Mass Mutual | A+ | A++ | 780 |
| Mutual of Omaha | A+ | A+ | 766 |
| Nationwide | A+ | A+ | 806 |
| Pacific Life | A+ | A+ | N/A |
| Principal Financial | A+ | A+ | 774 |
| Protective Life | A+ | A+ | 742 |
| Prudential | A | A+ | 770 |
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Affordable Life USA is a leading independent insurance agency offering comprehensive life insurance solutions to clients nationwide.
Eric Van Haaften, LUTCF
1-877-249-1358
