2nd to die competitive plans

Jun 12, 2019

  1. paulallred
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    Hi everyone, I have a married couple in their early 70's needing a 2nd to die policy. He is standard she is uninsurable.

    Can anyone tell me who has the most competitive priced plan?
     
  2. Robert Barney
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    Robert Barney Guru

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    If she is uninsurable, just put a policy on him.

    The cheapest permanent policies are no lapse UL, which Compulife quotes. Get a 30 day free trial by filling in this form:

    COMPULIFE | Free Trial

    Once you get the software, you can run those quotes yourself.
     
  3. paulallred
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    Thank you for your reply Robert.

    However your strategy wouldn't work if he dies first, thank you.
     
  4. Robert Barney
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    I'm curious, what would be the problem if he died first?
     
  5. paulallred
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    They need more coverage than their combined single life plans and writing it on him alone would be more expensive than a second to die. She is much younger than he so the blended age would help reduce the cost
     
  6. Allen Trent
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    2nd to die might be more expensive or declined if she is uninsurable. There is a risk to a carrier when 1 is unhealthy or uninsurable that the healthy one dies in car accident & 2nd one dies sooner because of bad health.

    Also, I have seen a handful of 2nd to die that should have been individual on the husband because the surviving spouse couldn't afford the ongoing 2nd to die premiums after the spouse died & the monthly income dropped from Soc Sec, pension drop.
     
  7. Robert Barney
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    OK, I'm getting lost. Yes, last-to-die policies on two lives, which pay a death benefit after the 2nd person dies, are usually less expensive than individual policies.

    But YOU said,

    "she is uninsurable."

    If she if uninsurable, it means she can't buy life insurance, is that the case?

    That does not stop them from buying a policy on him, which is what I suggested. But then you said:

    "your strategy wouldn't work if he dies first"

    I then asked:

    "I'm curious, what would be the problem if he died first?"

    Your answer was not a response to the question. Is there some problem if he died first, and the policy on him paid a death benefit. How is that a problem?
     
  8. Robert Barney
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    EXACTLY.

    Got a call from an agent years ago who had just such a situation. The company rated the second-to-die policy so heavily, because one insured was substandard. That second-to=die premium ballooned past the individual premium for the same coverage on the insurable second person.

    I said to the agent, just buy an individual policy on the insurable individual, it's cheaper.

    Yes, he said, but what if that person dies first?

    I responded, no problem, you get the death benefit and no more premiums to pay. The estate is miles ahead.

    The response, but the money is paid early, before the estate needs it.

    I said then take the money, by a CD and pay tax on the interest, until the second person dies. Did I mention there are no more premiums.

    It took him a minute, and then it suddenly hit him.

    I think that's what we are dealing with here. Folks are so locked into a situation that when confronted with an obstacle, they don't realizes that changes what is the best strategy. But perhaps there is some mysterious tax issue or concern that an early death benefit will get diverted for a different purpose. I am still waiting for more facts and stand to be corrected.
     
  9. Tahoe Ray
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    Tahoe Ray Guru

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    You're normally not getting declined on a second to die if have one partner uninsurable. Most carriers have uninsurable classes.

    If the female is much younger, you MAY get a discount assuming that she is the uninsurable one (per OP). If they're close to the same age, a GUL on the healthy husband is normally a better deal.

    The other way around (healthy young female, older male that's not) and this is a no-brainer (for joint life).

    However, like Bob pointed out, a single GUL for this case could be less expensive and assuming no estate issues (unlikely as there would be trust work involved), would have no net effect to the estate.
     
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