| Scenario | Estate value | Exemption | Tax rate | Liquid reserve | Legacy goal | Estimated coverage need |
|---|---|---|---|---|---|---|
| Moderate estate | $2,500,000 | $13,000,000 | 40% | $250,000 | $500,000 | $600,000 |
| Taxable estate | $18,000,000 | $13,000,000 | 40% | $500,000 | $1,000,000 | $3,500,000 |
| Higher goals | $9,000,000 | $13,000,000 | 40% | $200,000 | $3,000,000 | $3,200,000 |
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Future estate value:
FV = PV × (1 + g)ᵗ
PV is current estate value, g is growth rate, t is years.
- Taxable estate: Taxable = max(0, FV − Exemption)
- Estate tax estimate: Tax = Taxable × TaxRate
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Inflated needs:
NeedFV = NeedPV × (1 + i)ᵗ
Applied to final expenses, debts, gifts, and legacy goals.
- Coverage gap: Gap = max(0, TotalNeeds − (LiquidFV + OtherInsurance))
- Recommended coverage: Coverage = round_up(Gap, 10,000)
- Step 1: Enter a realistic current estate value and a conservative growth rate.
- Step 2: Set your exemption and tax rate based on your jurisdiction and plan.
- Step 3: Add final costs, debts, gifts, and legacy targets you want funded at second death.
- Step 4: Record liquid reserves and other coverage that will offset the need.
- Step 5: Click Calculate. Review the coverage gap and optional sensitivity range.
- Step 6: Use CSV/PDF exports to share assumptions with your planner and revisit updates annually.
Why survivorship coverage is used
Survivorship (second‑to‑die) life insurance pays when both insureds have passed. Because the benefit can arrive precisely when the estate needs cash, it is commonly used to create liquidity for taxes, equalization between heirs, and legacy gifts. Premiums are often lower than buying two separate permanent policies for the same combined benefit, since the insurer expects a longer payout horizon. Many plans use trusts to keep proceeds outside the taxable estate.
Estimating estate liquidity pressure
This calculator projects the estate to the second death using FV = PV × (1+g)^t. For example, a $2,500,000 estate growing at 4% for 20 years becomes about $5,480,000. If the exemption is $13,000,000, the taxable estate remains $0, and the tax line drops out. If the projected estate exceeds the exemption by $2,000,000 and the tax rate is 40%, the estimated tax need is about $800,000.
Projecting expenses and legacy goals
Final expenses, debts, charitable gifts, and legacy targets are inflated using (1+i)^t. With 2.5% inflation over 20 years, $20,000 of settlement costs rises to about $32,800. A $500,000 legacy target grows to roughly $820,000 on the same inflation path. Keeping these items separate helps you see whether the coverage need is driven by taxes, lifestyle commitments, or a deliberate inheritance goal.
Offsetting needs with liquid reserves
The model reduces total needs by resources expected to be available: projected liquid reserves plus existing insurance. A $250,000 reserve growing at 3% for 20 years becomes about $451,000. If you already have $300,000 of coverage, the combined offsets are about $751,000. The remaining gap is the estimated survivorship benefit required to close the liquidity shortfall.
Interpreting the premium illustration
The premium figure is an educational estimate based on the youngest age, policy type, underwriting class, and pay style. Treat it as a directional planning number for budgeting discussions, not as a quote. If the recommended benefit is large, explore ownership structures, funding schedules, and periodic updates as values, exemptions, and goals change.
It is one policy covering two people that pays a death benefit after the second insured passes. It is commonly used for estate liquidity, inheritance equalization, or funding trusts and charitable plans.
Use a conservative planning horizon based on health, family longevity, and professional guidance. Many users test several values (for example 10, 20, and 30 years) to see how growth and inflation change the gap.
No. It uses a simplified exemption and flat tax rate you enter. If you face multiple layers of tax, add them into a blended rate or model separate scenarios and compare the outputs.
Only include assets you expect to be accessible for taxes and costs. Some accounts may be illiquid, restricted, or earmarked for living expenses. When unsure, include a smaller “available” amount and revisit with an advisor.
Policies are often purchased in clean increments, and small modeling differences can move results. Rounding up adds a buffer so the plan is less sensitive to timing, fees, and modest assumption errors.
Review at least annually and after major changes: asset sales, business growth, new debts, births, or law changes. Updating keeps the coverage target aligned with your estate size and the liquidity you can realistically access.