A married couple who wants life insurance benefits to pay estate taxes when the second spouse dies should purchase what policy?

Rationale

Survivorship policy.

A survivorship policy, also known as a second-to-die policy, pays out the death benefit only after both spouses have passed away. This type of policy is specifically designed to cover estate taxes and provide financial support to heirs, making it an ideal choice for married couples planning for future tax liabilities.

A (Family policy.) YOUR ANSWER

A family policy typically provides coverage for multiple family members under a single policy, but it does not specifically address the needs related to estate taxes upon the death of both spouses. This type of policy may not effectively manage the financial implications of estate taxes when both partners pass away.

B (Joint life policy.) YOUR ANSWER

Joint life policies pay out a death benefit upon the first spouse's death, which may not be suitable for couples who want to ensure that their estate taxes are covered only after both spouses have died. This type of policy does not align with the goal of managing estate taxes effectively.

C (Survivorship policy.) CORRECT

This policy is specifically designed for married couples who wish to ensure that their estate taxes are covered after both partners have passed away. The death benefit is only paid out after the second spouse dies, making it a strategic choice for estate planning and financial management.

D (Universal life policy.) YOUR ANSWER

Universal life policies are flexible permanent life insurance products that provide a death benefit and a cash value component. However, they do not specifically cater to the scenario of covering estate taxes upon the death of both spouses, making them less suitable for this purpose.

Conclusion

A survivorship policy is the most appropriate insurance option for a married couple aiming to secure funds for estate taxes when the second spouse dies. Unlike other policy types, it ensures that the death benefit is only paid after both spouses have passed, allowing for effective management of estate tax obligations. This strategic approach helps to preserve the couple's wealth for their heirs while addressing potential tax liabilities.

A married couple who wants life insurance benefits to pay estate taxes when the second spouse dies should purchase what policy?

Survivorship policy.

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