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Imagine your online business is getting one thousand orders in a month. I know, it’s a good problem to have. It means that you are doing a good job selling, and now it’s time to fulfill the orders. Read more...
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Will Cardscan Executive Save Time Or Is It A Waste Of Time?
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If you have never heard of or are interested in the Cardscan executive, than we will give you several benefits that can be derived from using Cardscan executive and some possible negatives of the Read more...
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Five Uses For Survivorship Life Insurance
By Robert D. Cavanaugh, CLU
Survivorship life insurance is a life insurance policy that insures two people and pays at the second death. Also referred to as second-to-die life insurance, common abbreviations are SWL for survivor whole life and SUL for survivor universal life.
Advantages
Since the insurance company does not have to pay until the second person dies, the premium is lower.
The insurance company could issue a standard policy, even if one person has health issues. In extreme cases where one person is entirely uninsurable, a policy with an acceptable premium is possible.
There are many uses for a survivorship life insurance policy. Let’s look at five.
Estate Taxes
Life insurance is the least expensive method of providing cash for the payment of estate taxes. Since 1981, the law allows one spouse to transfer all their property to the other spouse at death tax free. This is the “unlimited marital deduction.” If there is an estate tax due, it is not due until the second spouse dies.
In response, life insurance companies designed the survivorship life insurance contract. Since the premium is lower, it is even a better solution than a policy insuring only one person.
Replacing an Asset Given Away
Charitable remainder trusts (CRTs) allow a person to sell a highly appreciated asset (stock, land, a etc.) without paying a capital gain tax, receive an income tax deduction and convert the asset to an income. At their death, the asset passes to the charity, not to their heirs.
An easy way to circumvent the children’s disinheritance is to insure mom and dad with a survivorship life insurance policy for the value of the asset given to charity. Sometimes premiums can be entirely paid from the income from the charitable remainder trust, which is often found money if the original asset was illiquid. The income tax deduction can be spread over six years if the asset contributed to the CRT is large enough. This is another premium source.
Even Out an Inheritance
A couple has three children and a family business. One of the children is active in the and the other two have careers of their own. If the bulk of the estate is the and the plan is to leave the to the active child, the other two children come up short.
A second-to-die policy on mom and dad can even things out. For example, let’s say the total estate is 6 million and the represents 4 million. If the parents leave the to the active child and the remaining 2 million to the other two children
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