Skip to main content

An estate planning tool for the not-so-wealthy


Posted on July 07, 2022

couple in aprons


Magnifying Glass Icon 
This article will ...

Describe some of the challenges that arise when trying to pass on an inheritance to several heirs.

Tell you why survivorship whole life insurance can offer an affordable way to address various estate transfer issues.

Compare premium schedules and point out how shorter ones can establish a legacy and build cash value relatively quickly.

Many couples in their working years or approaching retirement want to leave a legacy for their family and loved ones. But they may worry that their finances will fall short, especially if they live longer than expected or incur an unexpected medical expense. A survivorship whole life insurance policy can change that math.

This kind of policy brings together two elements. As a whole life insurance policy, it will build cash value over time in addition to providing lifetime protection. And as a survivorship insurance policy, it is life insurance that covers two policyowners and pays off at the second death.

“Survivorship policies are great estate planning tools, because they are often specifically meant for estate planning as opposed to spouses providing for one another with individual policies,” said Doug Collins, financial planning director for Fortis Lux Financial in New York City. “They also tend to be less expensive because you are insuring two lives together.”

Indeed, the cost savings can be significant.

“We had a couple — both age 60, nonsmokers — who wanted to leave behind $1 million for their family,” said Alejandro Mendieta, president of Coastal Wealth Private Client Group, a division of Coastal Wealth, a MassMutual firm, in Miami. “If they bought individual pay-to-age-100 whole life insurance policies, the combined premiums would have been a little over $42,000 a year for each person to carry a $500,000 death benefit for a total of $1 million. But by leveraging a survivorship policy, the premium was about $28,000, saving the couple about $14,000 a year.”1 (Related: Life insurance premium options)

Using a survivorship whole life policy for estate planning and leaving a solid legacy behind doesn’t take a lot of wealth or accumulated assets to be useful and attainable. It just takes planning ahead.

To understand how, it’s useful to look at what can be problematic with most inheritances.

Inheritance problems

Various types of property and assets that most people typically leave for their heirs can present challenges for wealth transfer plans. For example:

  • The value of assets like real estate and securities may vary based on market conditions.
  • Certain types of financial assets, like annuities and retirement accounts, may have a deferred income tax liability that will reduce their value when they pass to heirs.
  • Property, such as business interests, vacation homes, or family heirlooms may not be easily divided among family members.

How does a survivorship whole life insurance policy help?

First of all, it provides financial protection for your named beneficiaries, who receive a death benefit when the second policyowner dies, which is the primary aim of life insurance. But it also builds up cash value over time and that can be a valuable resource for the couple or surviving spouse if needed. Cash value can be tapped for any reason and at any time, whether it’s a need for funds to cover an emergency repair or help with a setback in retirement income.2 

But beyond those basic features, a survivorship whole life insurance policy can provide estate planning advantages.

Estate planning benefits

  • Tax efficiency. The policy death benefit will generally be paid income tax free to your family or beneficiaries. In addition, the policy ownership can be structured to keep it out of your estate for estate tax purposes.
  • Value not subject to market conditions. Unlike securities or real estate, the value of your policy death benefit and cash value will not vary based on changes in the financial markets. And the cash value grows on a tax-deferred basis at a rate guaranteed by the insurance company.
  • Easily divided. The life insurance will be paid to your beneficiaries based on your wishes, and may help you balance bequests to family members if you have a business or property that you want to leave to specific family members. (Related: Keeping a farm in the family)
  • Not subject to probate. The death benefit is paid directly to beneficiaries, so it avoids the delays and expenses of probate and will not be part of any public record. (Related: Why people fear probate)
  • Liquidity. The death benefit can provide cash to pay taxes and other expenses that may be due at death.
  • Creditor protection. In many states, personally owned life insurance cash values are fully or partially exempt from the claims of creditors.

Sizing up the death benefit

Of course, a major part of your legacy will be the basic death benefit provided to your beneficiaries, the size of which will depend on the face value you choose. (Calculator: How much life insurance do I need?)

The death benefit can also increase based on the growth in cash value, which, in turn, relies on the amount of time that the policy is in force. For instance, some policies can be paid up with as few as 10 premium payments, and so build cash value relatively quickly. Others use a pay-to-age-100 premium schedule, and so are slower to build cash value. (Related: Whole life insurance: Balancing protection and accumulation)

For instance, a $100,000 pay-to-age-100 survivorship whole life insurance policy (like the MassMutual Survivorship Whole Life 100) covering a nonsmoking couple, aged 55 and in good health, would cost $2,044 in annual premiums. After 10 years, it would have a guaranteed cash value of $15,834.

Yet, if the same couple bought the same coverage but in a survivorship whole life insurance policy that only required 12 annual payments (like the MassMutual Survivorship Whole Life 12 Pay), the guaranteed cash value would be $41,563 after 10 years. Of course, the annual premium payment would more than double to $4,497, but payments would end after Year 12.

The size of the death benefit can also be increased by dividends that may be paid by the insurance carrier, since dividends can be used to increase the life insurance protection of the policy or its cash value.3 (Related: What goes into whole life insurance dividends?)

As noted earlier, survivorship life insurance premiums tend to be lower than single person policies for the same amount. And there is another benefit.

“This kind of life insurance also allows us to have one insured individual on the policy who may not be in the best health or where qualifying may be a challenge,” said Nick Tranghese, a life and annuity specialist with Coastal Wealth in Fort Lauderdale, Florida. “This affords us the opportunity to really help those in need pass along the legacy they deserve.”

An example

Here’s a simple example of how a survivorship whole life insurance policy can play a role in estate planning.

  • A couple has accumulated $3 million in retirement savings and other assets.
  • They expect to need $2 million to live comfortably in retirement and want to leave $1 million to their children.
  • However, if things do not go as planned, they may need to spend the assets that they have earmarked for their family.

Alternatively, this couple could use a portion of their savings to purchase a survivorship whole life insurance policy. The policy could guarantee that a $1 million income tax–free death benefit will be paid to their children after they both have died. This may free up additional funds that they could spend in retirement.

This is in addition to the guaranteed cash value, which the couple or a surviving spouse could access later in retirement if other assets have been depleted. (Related: Protecting yourself against market fluctuations in retirement)


In the end, a survivorship whole life insurance policy can help accomplish several goals. Beyond being a resource for a surviving spouse, it can be a useful tool to ease the transfer of assets to loved ones and address your legacy and estate planning goals. A financial professional can help tailor such a policy to fit your personal goals in these areas.

Discover more from MassMutual …

How whole life insurance helps diversify your taxes

Whole life insurance: Criticisms and rebuttals

Life insurance: 3 income tax advantages


Premium quotes are for MassMutual’s Survivorship Whole Life 100 policy and individual Whole Life 100 policies with no riders.

Borrowing against life insurance cash value increases the chances that the policy will lapse, reduces the cash value and death benefit, and may result in a tax bill if the policy terminates before the death of the insured.

Dividends are not guaranteed.

Need a financial professional? Let us know ...

* = required

By submitting this request, I agree to receive e-mails and phone calls using automated technology from MassMutual, its financial professionals, affiliates or vendors on its behalf regarding MassMutual products and services, at the e-mail address and phone number(s) above, even if it is for a wireless phone. I understand I can contact a local financial professional directly to make a purchase without consenting to receive calls from MassMutual.


The information provided is not written or intended as specific tax or legal advice. MassMutual, its subsidiaries, employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

The products and/or certain features may not be available in all states. State variations will apply.

Survivorship Whole Life Legacy Insurance (Policy Forms: SWL-2015, ICC15SWL and ICC15SWL in North Carolina, SWL-NY-2019

and SWL-FL-2015 (Rev 2021)), is issued by Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001.