Second-to-die insurance policies usually not needed

A: A second-to-die life insurance policy pays benefits when the second of two people (usually a spouse) dies. Today, the primary purpose of such a policy is to provide cash to pay taxes if you have an extremely valuable illiquid asset, such as a business, worth millions of dollars.

With the new $5 million per person exemption in place for the next 2 years, 99% of estates will not be subject to the federal estate tax and, therefore, you would be insuring for a tax that (likely) will not apply.

Send your money management questions to [email protected]. Answers to our readers' questions were provided by Medical Economics editiorial consultant David J. Schiller, Schiller Law Associates, Norristown, Pennsylvania.