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2 types of life insurance policies

On Behalf of | Nov 15, 2018 | Uncategorized

A life insurance policy could be a major part of your estate plan. It’s a significant asset, a way for you to provide for your family long after you pass away. It can give them some safety and security.

There are many types of policies, and it’s important to choose the right one. They all have advantages and disadvantages that you need to weigh carefully. To get you started, here are two different types to consider:

Survivorship life insurance

A survivorship life insurance plan may also be called a “second-to-die” policy. The insurance can apply to multiple people — you and your spouse, for instance. After one of you passes away, nothing happens to the policy. It only pays out when the second person passes away.

This could happen instantaneously. For instance, if you and your spouse get into a car accident and you both pass away from your injuries, the policy will then pay out to the beneficiaries. These are probably your children, though you can choose whomever you wish.

The advantage of a policy like this is that you can get lower premiums. This happens because your life expectancy as a couple is longer than your life expectancy would be alone. You could pass away in just a few years, for instance, but your spouse may live for another decade.

Joint whole life insurance

This type of policy is often called a “first-to-die” policy. It also insures two people — a married couple, for instance, or a child and a parent — but it pays out when either one of them passes away. It does not wait for the second person to also pass away, as the survivorship policy would.

One advantage here is that the surviving spouse could then benefit from that policy. Perhaps both you and your spouse work, for instance. Your debt, with a mortgage and other loans, is based on having a pair of incomes. You worry that, if one of you dies, the other person will lose the home.

This type of policy would protect both of you at the same time. That way, no matter what unexpected challenges come your way in life, you would be ready for them. You could both have the peace of mind of knowing that the other would be financially protected in an emergency.

Your estate plan

The type of policy you choose can help to determine how it fits into your estate plan. Remember, if you pick a beneficiary for the policy, it then does not have to go through probate and your will has no bearing on who gets the money. Make sure you know exactly what steps to take to give your family the protection they need.


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