When looking to buy an insurance cover, it is easy to get confused about the right type you need. The
second to die insurance policy is one option that many families are considering, but should you too? The
best way to make this decision would be to have the relevant knowledge about the cover. Here, you will
learn about the policy, how it works, and the reasons why you would want to go that way.
Definition – Second to Die Insurance
Like many other life insurance policies, the second to die insurance, also known as the survivorship
cover, provides benefits to the beneficiaries who are mostly the dependents. This cover is taken out by
two people and is only paid out after both have died. The aim is to ensure the financial security of the
dependents when the providers have passed on.
The cover is typically bought by families that have a lot of assets and want to protect the estate from the
estate taxes that are due once both parents die. Besides protecting the estate from the effects of the tax
problems, it also ensures that the children left behind are financially okay. It is important noting that the
cover can also be taken by business partners who want to ensure that their establishment goes on
smoothly after both of them die.
How does the cover work?
The second to die policies are different from many other life insurance policies. The first thing about the
cover is that it is taken out by two people – the spouses. The good thing about it is that when checking
the qualification for the insurance, the policy provider will only look for one healthy or younger partner.
As such, even if one of the spouses is un-insurable for one or the other reason, they will still be eligible
for the cover.
The premium paid by the couple is a little more than what would be required to cater for the death
benefits. The excess is meant to pay for the accumulating estate tax that becomes due on the death of
the last of the two couples. This is possibly the best way to ensure the protection of the estate when the
financial burden becomes apparent. The beneficiaries would not have to liquidate their assets to pay the
What are the benefits of the Second to Die Insurance?
Other than ensuring that the estate remains the property of the family, some benefits come with buying
the Second to Die cover. The fact that both spouses take the cover reduces the risk for the insurance
company, and a couple would still qualify even if one of them is considered uninsurable. Furthermore, it
is a good way for parents to ensure that all their children have inheritance when they are not around.
The other advantage of taking out the second to die insurance cover is that it is less expensive compared
to other life insurance policies. The premiums paid are low since they will be paid for a long time.