What are some of the advantages of second to die life insurance policies?

For people who will leave behind estates worth $1.5 million or more, a second-to-die life insurance will be a worthwhile purchase. A second-to-die life insurance policy is also known as a survivorship life.

This policy basically insures two lives - usually a wife and a husband. Unlike original life insurance which only covers one life, the death benefit isn't paid until the second insured person dies.

The death benefit from a second-to-die policy is intended to pay estate settlement costs owed after both spouses die and federal estate taxes. In the 1980s, this product was developed in order for married couples to postpone federal estate taxes until both spouses died.

No federal estate taxes are owed at the time of your death when you leave all of your worldly belongings to your husband or wife. Assuming he or she isn't married, those assets might be taxed when the surviving spouse eventually dies, or become part of the estate of the spouse.

The advantages to second-to-die life insurance policies are:

• Easier to purchase: The insurance companies will be less concerned about their health because both insureds must die before the benefit is owed.  Even if one of the customers is uninsurable by traditional life insurance policies, companies are often willing to write this policy.

• Less expensive: It's true. Second-to-die life insurance policies are often less expensive than regular life insurance policies. This policy is cheaper because the insurance company owes nothing until both insureds die.

• Variable life insurance policies aren't limited to whole life policies: Your premiums will be invested in a separate account. The value will oscillate based on the performance of the market.

• Preserves your estate: While the life insurance pays the taxes, the estate transfers intact to their heirs.

• Pays your estate taxes: This is a great advantage, especially when the estate might owe income taxes on individual retirement accounts.

• Builds your estate: The second-to-die life insurance is marketed to build your estate as well.

• Preserves your estate: This is important if you feel strongly about preserving your possessions.