Accredited Wealth Management Advisor (AWMA) Exam 2 Practice Test

Second-to-die life insurance is designed to help with estate planning by providing liquidity after both spouses have died. Because the policy pays only on the second death, it ensures there are funds available to cover estate taxes and settlement costs when heirs inherit, preventing the need to force the sale of assets or a business to meet tax obligations. It can also help preserve wealth for heirs and simplify wealth transfer. This type of policy isn’t typically used to fund a buy-sell agreement, which generally relies on policies that trigger on the death of one owner to buy out the deceased’s share. It also doesn’t address living expenses or immediate needs like paying a mortgage or funding college tuition, since the payout occurs after the second death rather than at the death of one individual.