The Second-To-Die Policy

Benjamin Haas |



  • Insurance is a very important tool as we go through life. It can help a survivor pay down debt (like a mortgage), get the kids through school and replace paychecks if someone passes away prematurely. But it also has a role in estate planning. When it comes time to consider a legacy plan, insurance can serve the purpose of replacing wealth or creating wealth, and in some cases, can be a way for turning taxable assets into a tax-free death benefit. Cost may seem to be prohibitive in our later stages of life though. Enter the “second-to-die insurance.” It is a type of life insurance on two people (usually spouses, but not always) that provides benefits to the beneficiaries after the last surviving person passes away. And it’s because of that fact, that the cost may be more palatable.

Where the CFP® sees the fit:

  • Those not planning to spend their Required Minimum Distributions (RMDs) from IRAs or 401(k)s
  • Those looking to leave a legacy to their heirs, charity or both
  • Those looking to replace wealth anticipated to be lost to taxes at death; federal or state death taxes or more commonly, income taxes due on qualified assets

The strategy:

  • You may not believe it but there is such a thing as ensuring two lives via one policy. Of course, you must have the same beneficiaries and an obvious insurable interest. But there can be great leverage in the fact that an insurance company is able to spread the risk of a death claim over two lives, not one. That’s because the death benefit doesn’t pay until the second insured passes away. This makes for a great estate and legacy-planning vehicle that can serve one or more purposes in a plan. It can create wealth for heirs, where there may not otherwise be a sizable estate. It can replace wealth that could be lost to long-term care or taxes. Or it can enhance wealth because a couple has idle assets that, through insurance, can be levered into additional dollars that happen to pass tax-free to their heirs.

Additional notes:

  • Perhaps you already have insurance that has an accumulated cash value. Note that you cannot exchange individual cash value into a joint policy via section 1035 of the tax code.
  • Insurance rates are typically based on the lower health rating of the two applicants.
  • It’s an insurance policy. So you are still at the mercy of an underwriting process.

Bottom line:

  • The important clarification is that unlike regular life insurance, the surviving partner does not receive any benefits after the spouse dies. But if the intent is to leave money to you children or charity, I find the expenses associated to be more attractive when paired together, making this an underutilized strategy for a healthy pair.


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Securities offered through LPL Financial, Member FINRA and SIPC. Investment advice offered through U.S. Financial Advisors, a registered investment advisor. U.S. Financial Advisors and Haas Financial Group are separate entities from LPL Financial.

This material contains only general descriptions and general strategies for us of a second to die life insurance policy. This content should not be considered a substitute for individual financial advice. If you need more information or would like personal advice you may contact our office.