Second-to-die insurance policies usually not needed

Learn whether it's worthwhile to obtain a second-to-die insurance policy for estate tax purposes.

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 Answers to our readers' questions were provided by Medical Economics editiorial consultant David J. Schiller, Schiller Law Associates, Norristown, Pennsylvania.