While predicting the future is impossible, you can prepare for it by establishing an estate plan. If you’re getting your California estate in order, you might have heard about survivorship life insurance.
Understanding survivorship life insurance
Life insurance typically helps provide coverage for one person. Survivorship life insurance protects two people. This type of insurance is offered as a universal, variable or whole-life plan. After both policyholders pass away, survivorship life insurance pays a death benefit to any named beneficiaries.
Why include survivorship life insurance in your estate plan?
It’s understandable to want estate planning to be as simple as possible. However, it’s worth adding survivorship life insurance to your estate plan for a few reasons.
- Protecting your beneficiaries: Most people want to leave something behind for surviving family members. For instance, a married couple can set up a survivorship life insurance policy with their children as beneficiaries.
- Maximizing charitable contributions: Survivorship life insurance is also helpful for philanthropists wanting to donate as much as possible.
- Higher death benefit: Typically, a policy that protects two people offers a higher payout to beneficiaries than a single-person policy.
- Minimizing tax expenses: In most cases, beneficiaries receive a tax-free death benefit payout. This perk is great for policyholders who don’t want to see their hard-earned money go towards tax expenses.
- Helping someone with special needs: Understandably, those with special needs struggle with some aspects of life. Survivorship life insurance death benefits are easy to transfer to a named trust, such as a special needs trust.
Whether you choose survivorship life insurance or something similar, you’re making a smart choice. The right policy gives you peace of mind while providing for those you leave behind.
