What is 'Second-To-Die Insurance'

Second-to-die insurance is a type of life insurance on two people (usually married) that provides benefits to the beneficiaries only after the last surviving person on the policy dies. This differs from regular life insurance in that the surviving partner doesn't receive any benefits after the spouse dies. Thus, second-to-die insurance is used for estate planning.

BREAKING DOWN 'Second-To-Die Insurance'

Parents who take out this type of insurance are usually thinking of their children. For example, a second-to-die insurance policy could be designed to pay estate taxes or support any surviving children. It is also called "dual-life insurance" and "survivorship insurance".

Generally, second-to-die insurance is used for estate planning, and usually they cover two or more people for less money than individual policies would cost. The death benefit from a survivorship life insurance policy is typically calculated to pay federal estate taxes and other estate-settlement costs owed after both spouses pass away. The second-to-die life insurance product was developed in the 1980s when a new law enabled married couples to delay federal estate taxes until both spouses passed away. This law helped surviving spouses avoid depleting their finances to pay big tax bills, which put additional financial pressure on other remaining heirs.

A second-to-die life insurance policy starts off with an annual premium that covers the death benefit. The excess grows tax-deferred, building cash value that is supposed to cover some or all of higher premiums as you age. In the 80s and 90s, policies were sold with projections showing earnings of 6 to 12 percent interest. With the Federal Reserve keeping interest rates low for the better part of the past decade, rate have been closer to 3 or 4 percent, with a minimum guarantee.

Reasons to Purchase Second-to-Die Insurance

More economical. The premium is based on the joint life expectancy of a couple, and because it pays nothing until both spouses die, the premium is significantly less expensive than buying separate policies for both people with the same total dollar amount in benefits.

Easier qualification. If one person isn't in great health, it doesn't matter as much because both policyholders must die before benefits are paid. Otherwise, the person in bad health may be denied life insurance if applying for a single policy.

Estate planning. In some cases, second-to-die life insurance can actually help build an estate, not just protect it from taxes. Like traditional life insurance, the death benefit of a second-to-die policy can ensure your beneficiaries receive a minimum amount of money, even if all the savings of the insured were depleted during their lives.

Maintains an estate. Many people buy second-to-die life insurance policies in order to ensure their estate transfers to their beneficiaries intact. For example, they may want to know the family cabin will remain in use for generations, rather than be sold to pay death taxes.


  1. Life Insurance

    A protection against the loss of income that would result if ...
  2. Insurance Trust

    An insurance trust is an irrevocable trust set up with a life ...
  3. Guaranteed Issue Life Insurance ...

    A type of financial-protection policy that provides cash to a ...
  4. Variable Life Insurance Policy

    A form of permanent life insurance, Variable life insurance provides ...
  5. Universal Life Insurance

    A type of flexible permanent life insurance offering the low-cost ...
  6. Term Life Insurance

    A policy with a set duration limit on the coverage period instead ...
Related Articles
  1. Managing Wealth

    Why the Wealthy Should Buy Lots of Life Insurance

    Properly structured life insurance can help in managing, preserving and growing wealth.
  2. Financial Advisor

    Getting Life Insurance in Your 20s Pays Off

    Find out how Americans in their 20s can benefit from a well-thought-out life insurance policy, especially if they are able to build cash value for retirement.
  3. Insurance

    Term Life Insurance: Everything You Need to Know

    Term life insurance is an affordable way to financially protect your loved ones after your death. Here's what you need to know before purchasing a policy.
  4. Insurance

    The Best Type Of Life Insurance For You Right Now

    Different stages of life call for different amounts of life insurance coverage. Find out what you need, when and why.
  5. Retirement

    Does Life Insurance Make Sense When You Retire?

    Whether you need life insurance in your retirement depends on your existing insurance and your goals for passing on your wealth.
  6. Insurance

    Life Insurance: How Long Does It Take To Get Paid?

    How to file for a life insurance payout – and how long it takes to receive it. Plus, new ways to plan for payments that provide an income stream.
  7. Managing Wealth

    Use Life Insurance to Help Those With a Disability

    Why and how to use permanent life insurance to help provide for a family member with a disability or special needs
  8. Financial Advisor

    Life Insurance for a Newborn Baby

    In most cases, this is unnecessary, though a small policy offers benefits in certain cases.
  9. Insurance

    4 Things That Keep You From Getting Life Insurance

    We look at four common reasons people give for not applying for life insurance, and see if they're legitimate.
Hot Definitions
  1. Liquidity

    Liquidity is the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's ...
  2. Federal Funds Rate

    The federal funds rate is the interest rate at which a depository institution lends funds maintained at the Federal Reserve ...
  3. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  4. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  5. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
  6. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
Trading Center