A second-to-die life insurance policy insures two
lives rather than one. Under a second-to-die policy, no benefits are
paid when one of the two die. Instead, the benefit is paid only after
the second one dies. Relatively affluent couples can benefit from a
second-to-die policy. If a couple wants such insurance, they can
create a separate irrevocable life insurance trust to purchase the
policy. By placing the insurance in the trust, they will ensure that
the insurance proceeds paid to the trust will be totally free of
federal estate taxes. Second-to-die insurance is also popular among
small business owners who want to make sure that their children will
have enough money to keep the firm going after both parents have died.
