Does Your Second-to-Die “Survivorship Life” Insurance Policy Offer a “Split Option”? It Should

The SL policy split option is a desirable feature, because it permits the SL policy to be split into two individual policies. The most common occasion for exercising the split option is when a married couple becomes divorced. Some insurers permit the policyowners to split SL policies if the tax law changes in such a way that the survivorship life policy would no longer be an effective estate planning tool, such as if the unlimited marital deduction was repealed. In some cases the policyowners may exercise a split option only if both insureds show evidence of insurability. In general, the split option allows each insured to acquire individual coverage equal to half the face amount of the survivorship policy. However, some companies allow the policyowner to elect unequal splits at the time they issue the survivorship policy. If a couple’s assets are not split evenly, as is generally the case, this feature is attractive.

Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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