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How Last Survivor Insurance Can Help Protect Your Estate

A couple explores estate planning options online, including strategies such as last survivor life insurance to help protect assets and preserve wealth for future generations.

Over the years, you’ve worked hard to grow the value of your business, property, and other investments. When it’s time to settle your estate, much of that value may be tied up in these assets, not in cash. If the total value of your estate exceeds filing thresholds set by the IRS or your state, estate taxes could take a large portion of it.  

To cover those taxes, your heirs might have to sell the assets you’ve spent a lifetime building. This issue can arise after the death of the surviving spouse, when estate taxes and final expenses become due.2

Benefits of a Last Survivor Life Insurance Policy

A last survivor life insurance policy can help. It covers two lives (usually you and your spouse) and pays out only after the second death. The death benefit from a last survivor policy can:

  • Provide cash to cover estate taxes and settlement costs.
  • Help protect your business from being broken up or sold.
  • Prevent heirs from being forced to sell assets quickly.

Because the policy pays only once, it can be more affordable than buying two separate policies for the same purpose. It can also work with an Irrevocable Life Insurance Trust (ILIT) to keep proceeds outside your taxable estate and give you control over how funds are used.

A last survivor policy isn’t for everyone. Since it doesn’t pay after the first death, you may need additional coverage if income replacement or early liquidity is important. Your tax and legal advisors can help you decide if this type of policy can be a good addition to your estate plan.

Talk to your Federated® marketing representative for a referral to a member of Federated’s network of independent attorneys to learn more.

 

1. Internal Revenue Service. Estate Tax. https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax. Accessed June 16, 2026.
2. Internal Revenue Service. Filing Estate and Gift Tax Returns. https://www.irs.gov/businesses/small-businesses-self-employed/filing-estate-and-gift-tax-returns. Accessed June 16, 2026.

 

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This article is for general information and risk prevention only and should not be considered an offer of insurance or legal, financial, tax, or other expert advice. The recommendations herein may help reduce, but are not guaranteed to eliminate, any or all losses. The information herein may be subject to, and is not a substitute for, any laws or regulations that may apply. This information is current as of its publication date and is subject to change. Some of the services referenced herein are provided by third parties wholly independent of Federated. Federated provides access to these services with the understanding that neither Federated nor its employees provide legal or other expert advice. All products and services not available in all states. Qualified counsel should be sought with questions specific to your circumstances. All rights reserved.

Published Date: July 15, 2026

Categories: Its Your Life