How Are Survivorship Life Insurance Policies Helpful in Estate Planning?

Survivorship life insurance policies can help estate planning by providing funds to help pay taxes. It can also be used for charitable donations, supporting children with special needs, and to provide a financial cushion for beneficiaries.

Survivorship life insurance policies are different from traditional whole, term, and variable policies. This article examines the components of survivorship life insurance, including how it impacts estate planning for all those involved.


Survivorship Life Insurance Policies Defined

Survivorship life insurance is a type of permanent life insurance that covers two people under one policy. The two individuals are usually married. This type of policy includes the death benefit and a cash value component. It is sometimes referred to as second-to-die insurance or dual-life insurance.

A survivorship policy is in place until both policyholders pass away, so long as premium payments are made on time. This type of insurance is usually cheaper than getting individual permanent life insurance policies for each person.

Survivorship life insurance can help with many financial aspects. Policyholders could use it to donate their assets to a charity or good cause years after their passing. It can also be used to help with transitioning your business if your family members do not plan to continue the endeavor.

Policyholders may also use survivorship insurance to continue supporting a child with special needs. For this particular case, there may also be a special needs trust you can add to your survivorship life insurance policy – inquire with Sim Gakhar to see if this is possible with your insurance carrier.

Most importantly, survivorship life insurance allows policyholders to preserve their assets, paying estate and federal taxes before passing along the intact estate to beneficiaries along with the remainder of the death benefit.


Estate Planning Defined

Estate planning is the preparation of tasks that will help manage a person’s assets in case of incapacitation or death.

Many people associate estate planning with high socio-economic status. The truth is that all individuals should consider estate planning to protect their children, provide for their healthcare, and offer legal directives if they become unable.

Core components of estate planning should include:

  • Designating guardianships for minors
  • Designating health care proxies in case of incapacitation
  • Designating a power of attorney
  • Financial planning, such as delegating beneficiaries


Survivorship Life Insurance and Estate Planning

Above all, survivorship insurance is used for estate planning. After the first spouse’s death, estate taxes pass to the surviving spouse. Once the second policyholder is deceased, funds can be used to help pay taxes on assets as well as to benefit the established beneficiaries. These taxes include settlement costs and the probate fees often associated with transferring estates and assets to beneficiaries.

Additional uses for survivorship life insurance include:

  • Charitable giving: Policyholders can establish that a portion or all of their death benefit goes towards a charitable cause near and dear to their hearts. These donations can occur in one lump-sum or continuously for years to come.
  • Supporting disabled children: Survivorship life insurance policies are essential for those policyholders who have disabled or special needs children. Securing your children’s financial and physical futures is a key part of estate planning.
  • Business transition planning: Steps need to be taken to transition a business from one owner to the next, whether that be to your family or a distinct individual. Survivorship life insurance can help with the costs associated with this transition while also supporting the family that the business owner left behind.


Survivorship Insurance Benefits

Apart from all of its positive financial implications for beneficiaries and estate planning, survivorship insurance in Canada also comes with the benefits of affordability, a cash value component, and its ability for customization.



Survivorship policies cover two individuals at once. Since this is a permanent type of insurance policy, insuring two individuals increases the expected duration of the policy. This allows insurance providers to offer lower premiums for couples than they might offer for an individual policyholder.

If you´re comparing rates and inclusions for survivorship insurance policies within Ontario, reach out to insurance agent Sim Gakhar for more information on the options in your area.


Cash Value Component

A portion of each of your premium payments for your survivorship life insurance goes into a cash value component. This cash value can be accessed through a withdrawal or policy loan to address financial needs; however, policyholders must repay their withdrawals/loans to avoid deductions from their death benefit.



Survivorship life insurance policies can often be customized through add-ons called life insurance riders. These riders can include things like accelerated death benefits, long-term care, and living benefits. Each rider has its own cost to add.

Some survivorship policies may already include a living benefit rider, which allows access to a portion of the death benefit if diagnosed with a terminal illness as defined by the policy.


Alternatives to Survivorship Life Insurance

We recommend meeting with an insurance professional like Sim Gakhar to discuss survivorship insurance and its alternatives to see which is best for your situation.

Survivorship insurance plans are sometimes confused with first-to-die insurance policies. Unlike survivorship insurance, first-to-die policies provide the death benefit upon the first policyholder´s death. The surviving spouse is then offered the chance to apply for a new policy, usually within the first 60 days.

Alternatives to survivorship life insurance include individual permanent or term life insurance policies for each spouse. Other types of permanent life insurance policies for individual policyholders include universal life, variable, and whole life insurance.

Term life insurance policies are normally less expensive than permanent policies, but their premium depends on things such as age, health status, employment status, and more. Term life insurance also has an expiration date, and renewal of the policy does not guarantee the original premium rate. These policies do not include a cash value component.

If your focus is on estate planning, Sim Gakhar is an experienced investment and insurance agent who can provide the knowledge you need to choose the right policy for your estate and future today.


FAQs & Helpful Resources Regarding Life Insurance for Estate Planning


Other Types of Life Insurance Products You May Want To Check Out





get quotes