Survivorship universal life insurance may not be the first financial tool that comes to mind when 
planning for retirement. But in view of the current economic and political environment, this niche product should see increasing sales.
Many people saw a 30%-50% decrease in their retirement accounts when the stock market went into a tailspin at the end of 2008. Although the markets have stabilized for now, most retirement accounts are still far from their levels of a year ago. This has made investors squeamish about putting additional money into the market.
The reduction in investment accounts not only impacts retirement income, but also wealth transfer. Most people are able to reduce expectations concerning how much money they will have for themselves as income during retirement. But when thinking about how much money is available to transfer to their children, reduced expectations may be more difficult.
If a client's dream was to leave the children with a nice nest egg, that dream may have turned into a nightmare after the drop in the markets in recent times. One option that can relieve that worry is the survivorship UL product.
Survivorship life insurance pays a specified death benefit upon death of the second of two insureds covered by the policy. Typically, the two insureds are relatively affluent spouses who purchase the policy to provide an inheritance and protect heirs against burdensome estate taxes. A couple can purchase a survivorship policy and know exactly how much will pass on to each of the children after the second death.
Since the survivorship product covers wealth transfer needs and allows retirees to use other investment tools to cover retirement income needs, people can view survivorship insurance as a free pass to spend retirement income rather than save it. 
The political environment should also help sales of survivorship UL. The estate tax exclusion of $3.5 million in 2009 will be repealed in 2010 and then revert back to a $1 million exclusion in 2011. The death benefit on a survivorship policy is excluded from the value of the estate as long as there is third party ownership of the policy. That allows the death benefit to cover estate taxes, preserving the value of the estate in addition to transferring wealth.
The 2011 maximum estate tax rate will be 55%, up from the 45% maximum rate in 2009.
That means that over half of the value of an estate may need to be paid to the government. It also means that reverting back to the $1 million exclusion amount in 2011 could cost a family more than $1.3 million in additional taxes from the 2009 levels.
