The key difference between a second-to-die life
insurance policy and traditional whole life and term policies is that
a second-to-die policy insures two lives rather than one. If you have
a traditional whole life or term policy that insures only your own
life, the policy will pay off as soon as you pass away. A
second-to-die policy can be either a whole life or term policy, but
the benefits won't be paid until the second policyholder dies as
well. When an insurance company writes a second-to-die policy, it
knows that it probably won't have to pay off any time soon because
the payout won't be triggered until two people (rather than one) pass
away. As a result, insurers charge much lower rates for second-to-die
whole life or term coverage than for policies that insure only one life.
