INSURANCE
circumventing the tax, but it shouldn’ t be abandoned. It could have other uses. He urges advisors to take a“ holistic look” at clients’ complete circumstances and future needs, and then evaluate what types of coverage may be helpful as part of an overall comprehensive plan.
For instance, clients who put their policies into an irrevocable trust for estateplanning purposes can“ shift around” the trust assets to“ plug gaps” in coverage, such as for long-term care or disability. Survivorship policies can also be great tools for blended families, benefiting the children of a first marriage, say, while leaving the rest of the estate to the second spouse or the children of a second marriage. If the old policy has cash value that’ s performing well, it could be a“ good asset-protection tool. … With the stock
It’ s important to remember that estate-tax exposure is only one factor in a broader planning framework, says John Hancock’ s Tracey Ullom. For example, if one of the two policyholders in a couple is in poor health, survivorship insurance can provide coverage for the one who would not otherwise qualify.
market looking so precarious, that old boring life insurance policy may prove to be a valuable ballast [ against ] future market gyrations,” says Shenkman.
Clients who don’ t repurpose their policies can always sell them on the secondary market, says Barry Flagg, a certified financial planner and founder of Veralytic, a life insurance research concern in Tampa, Fla.“ Now that the higher exemption amounts are‘ permanent,’ at least until the next administration, I expect to see even more people repurpose or sell.”
But those who do sell may regret it later, Shenkman says. Over time, they could become too old or too unhealthy to qualify for a new policy. Or if a new Congress or administration lowers the exemption threshold again,“ along the lines of what the Democrats have proposed for more than a decade,” he adds, the policyholders may wish they had not canceled their old policies.
Indeed, second-to-die life insurance was developed in reaction to a change in federal tax law in the early 1980s. That change allowed couples to defer federal estate taxes until both spouses had died, so that a surviving spouse didn’ t have to deplete family finances to pay big tax bills. Survivorship insurance offered a relatively low-cost solution for funding future estate-tax liability.
A second-to-die life insurance policy typically starts with an annual premium that covers the death benefit. In the intervening years, any excess value can grow tax-deferred, building cash value that can cover some or all higher premiums as the policyholders age. These policies are often used to fund an irrevocable life insurance trust, which minimizes estate taxes by removing the policy( and its proceeds) from the policyholder-grantor’ s estate. The trust also protects funds from creditors, effectively preserving the transfer of wealth across generations.
Tracey Ullom, a vice president at John Hancock in Boston, acknowledges that there was initially some“ speculation within the life insurance industry” that the exemption increase might“ negatively impact sales tied to estate-tax planning,” she says.“ That concern has largely been dispelled.”
Many families who faced estate-tax exposure before the One Big Beautiful Bill continue to have that liability, she contends, since their estates are so large that the new exemption limits won’ t affect them. In any case, she says that life insurance can“ retain significant value” in an estate plan, even if it’ s only to maintain flexibility for“ future legislative or personal changes.”
It’ s important to remember that estate-tax exposure is only one factor in a broader planning framework, she adds. For example, if one of the two policyholders in a couple is in poor health, survivorship insurance can provide coverage for the one who would not otherwise qualify. It can also help parents plan for the well-being of a disabled child after the parents are gone.
Furthermore, when these policies are owned by a trust, they can include“ spendthrift provisions” that protect assets from a beneficiary’ s mismanagement by appointing a trustee to manage and disburse funds.
The new law certainly didn’ t slow down life insurance sales overall, at least not according to LIMRA, the Windsor, Conn.- based insurance research organization. In the third quarter of 2025, total new premiums jumped 16 % year-over-year to $ 4.3 billion, and the number of policies sold rose 10 %— the highest quarterly growth rate since a pandemic sales surge in the first quarter of 2021.( The only exception was fixed universal life, a type of permanent life insurance with a cash value that grows at a fixed rate. The new premiums paid on this product fell 2 % and sales dropped by 1 % year-over-year.)
“ It isn’ t surprising that sales increased even though the exemption [ threshold ] is increasing,” says Karen Terry, a corporate vice president at LIMRA and head of its insurance research. People tend to hold off buying policies when there are potential changes pending, but there is usually a bump in sales in times of stability— for instance, after new laws pass.“ Financial planning shouldn’ t be based solely on regulatory changes but on potential future financial needs,” she says.
Of course, clients may not be paying attention to the new exemption rules, or may not care.“ This is why the increasing involvement of wealth advisors is vital,” Shenkman says.“ Every client’ s circumstances evolve, and so must their planning.”
52 | FINANCIAL ADVISOR MAGAZINE | DECEMBER 2025 WWW. FA-MAG. COM