“Survivorship” or “2nd to die” insurance is a type of permanent insurance primarily used as an estate planning tool. Most people that buy survivorship life insurance policies are over 50. Therefore, they need large death benefits and premiums can be quite large, often well over $10,000 per year.  So if you can save 20% to 30% because you’re an educated consumer, over a lifetime, those savings can be very significant.

When evaluating these contracts, keep the following in mind:

1.   Are there any adverse health factors which may affect the premium?  If so, you’ll need to have your health condition and medical records presented to several different companies to determine which will make you the best offer.  Pay little attention to illustrations which are drawn up by salesmen prior to the company actually evaluating your health history.

2. Does the policy have higher than necessary premiums because it requires an unnecessary buildup of high cash values?  Remember, in most cases, the cash values will be owned by an irrevocable trust, over which you have no control.   To save money, look for policies that focus on maximizing your death benefit, with less emphasis on cash value accumulation.

3. Did your agent offer you the “low-load” version of each product, which is available at virtually every company?   At some companies, this is done through a combination of riders.   If the policy is designed in this manner, the agent will earn less, and you’ll pay less.

4. Regardless how good the illustrations look, don’t rely too heavily on them.  Carefully examine the guarantees in the policies.  Many companies are currently crediting higher interest rates than they can sustain in today’s market.  If rates go down, what happens to your policy?  To find out, make sure you see an illustation which shows how your policy will perform at an interest rate that’s lower than is currently being credited.  Use common sense.  And be smart by funding the policy responsibly, so that it won’t self-destruct.

5. In all cases, you should examine the financial strength of the companies you’re looking at.  Request and compare each company’s ratings from A.M. Best, Standard & Poor’s, Moody’s, and Duff & Phelps.  And, if the death benefit is over two million, you should strongly consider diversifying the risk among several carriers.