The benefits that come with the Second to Die policy have got many families considering taking out this insurance cover. This is especially the case for families with huge amounts of assets looking to plan for their heirs’ future. The cover is paid to the dependents, who are mostly the children, once both parents pass away. As such, it can be seen as a way of securing the children’s financial future when both breadwinners are no longer around.
While the main advantage of buying this cover is to protect the family assets from the accumulating estate tax, here are the other benefits of the insurance, as well as the possible drawbacks.
Strengths
- Cheaper than most life insurance covers
The first thing you will notice is that the cost of buying the Dual Life insurance policy, as it is also called, is lower when compared to many other life insurance policies. This is regarding the premium payments. The reason behind this is because the time before the insurance is paid out is considered long – that is after both couples die.
- Easy to qualify
When it comes to the qualification of the Second to Die insurance, the underwriting is rather lenient. This cover is taken out by two people, making it less risky for the policy provider. So, even if one of the spouses is considered uninsurable, maybe because of their medical history or other issues, the two can still qualify for the cover if the other is healthy. Such a consideration increases the chances of qualification for the insurance coverage due to lenient underwriting.
- Equitable inheritance
Many parents desire to ensure that their dependents are financially stable. When the family has an estate to be run after the death of both parents, it will usually be the work of one of the children, but the survivorship insurance cover ensures that all the children have a share in the same. Also, this cover comes in handy when one or more children require a substantial amount of financial support. An example would be a dependent with special care needs.
- Protection of the family estate
Families that own estates are faced with the need to pay the taxes that have been accumulating over the years when the parents were still alive. Once they die, the taxes become due, and failure to settle them may lead to losing the property altogether. The second to die cover ensures that the taxes are catered for as well as the finances of the dependents.
Drawbacks
- It could be a burden if one partner dies earlier
Should one of the couples pass on way earlier than the other, the burden of paying the premiums would be left for them alone. Also, the amount of premiums paid by the younger of the two is more than what could have been the case had they taken out other life insurance policies.
- No changes to the policy
Once you have bought your cover and signed off all the documents, you will not be able to make any changes in the future. That is why it is recommended that you ensure to get everything right the first time.