Last survivor life insurance, or survivorship life insurance, is a type of joint whole life insurance designed mainly for married couples.
Federal estate taxes are not collected on property left to a spouse, but when the surviving spouse dies, estate taxes are due and can be very high. A last survivor policy pays a benefit only after both spouses have died, providing funds for estate taxes.
For Insurance, a free service that connects consumers with agents and policies, lists these three advantages of last survivor life insurance over individual coverage:
- Lower premiums ? more cost effective than two individual policies.
- Medical underwriting standards may be eased with respect to one of the insured's, due to second death payouts.
- Lower "economic benefit" reportable for income taxes in Split Dollar Plans (often 10 times lower).
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