Those with an estate may want to consider survivorship life insurance

Jul 08, 2011

Survivorship life insurance can pass a family's finances down to their children

One report says older Americans looking to enhance their investments and retirement potential may want to consider survivorship life insurance, something that's useful for those looking to leave an estate.

California's Fresno Bee reports such policies can pay for estate taxes or leave a tax-free inheritance to a policyholder's children. The coverage sometimes comes at a lower cost and is only paid out after two insured people - normally, a married couple - has passed away. Financial advisers sometimes recommend such policies to older investors who want to leave a financial legacy to their children when they pass away.

The report notes a $200,000 premium policy would need to generate an 8 percent return annually to fetch a $800,000 payout, something that may be a bit steep considering the low interest rates on savings in today's market. Seniors may need to expect a lower payout, the report advises.

Consumers can sometimes pass down a life insurance policy as an inheritance to their children, and increased gift tax allowances are currently making it possible to pass down larger policies.

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