urvivorship life (a.k.a. "second-to-die") insurance is one of the hottest products in the life insurance industry today. If you're self-employed, a small business owner or part of a dual-income family, this type of life insurance may solve many of your estate planning issues.

The first step is to evaluate your estate. If you're married with a joint estate of more than $2 million, or $1 million if you're single, you may be a prime candidate for these policies.

Think of survivorship life as a more complicated version of an individual life insurance policy. You can buy a whole life, universal life or variable life policy (or a combination thereof), but so far term survivorship life is not on the market.

Basically, survivorship insurance is a joint life insurance policy that only pays the death benefit when the second person dies. It's complicated because you're dealing with two sets of actuarial tables and many other factors, all rolled into one policy. But the complexities may be worth it, because survivorship life insurance may be the cheapest way for you to solve an estate or business problem.

For example, a $1 million survivorship life policy is cheaper than a $1 million policy on one person or separate $500,000 policies on a couple. Even when one spouse is uninsurable, a survivorship life policy is still less expensive than an individual life policy on the healthy spouse. After all, there is always a chance the uninsurable spouse will outlive the healthy one.

The first survivorship life policy was developed in 1961, but the policies did not become popular until after the Economic Recovery Tax Act of 1981. Then it became possible to leave all of your assets to your spouse and to not pay taxes on those assets until your spouse died. Suddenly, there was a huge market in the estate planning area.

These are some of the reasons why you may want to consider survivorship life insurance:

As estate planners come up with new ways to solve estate problems, there are many more ways to use this type of life insurance. However, it is still primarily used in the personal estate-planning arena.

How do you choose among different survivorship life policies? The first thing to do is to think of them as complicated individual life policies, and follow the same steps outlined in my previous columns on selecting life insurance.

Here more than ever, the annual premium in the life insurance illustrations is the least important factor in making a decision. Because you want to assume that a survivorship life policy will be in force for many years to come, you must make sure the assumptions used in the illustrations are reasonable. The expenses and mortality charges should be realistic and an investment return of 8 percent or less should be used. Each of these variables can change, and a small change in one can make a big difference in the policy's ultimate cost.

Most survivorship life illustrations use the "vanishing premium" concept, which assumes that eventually there will be enough cash value and annual dividends or interest to pay the premium. At some point in the future, you won't pay the premiums using out-of-pocket cash.

This is where you can really get into trouble if overly aggressive assumptions are made. It may take years longer than you expected before premiums stop. Even worse, you could go several years without having to pay a premium and then suddenly huge amounts are required to keep the policy in force (possibly after you've retired and your income is reduced). It never hurts to be too conservative in your assumptions.

When comparing illustrations, also beware of comparing level annual premium policies with "modified premiums," which have a lower annual premium for the first 10 or 15 years but then spike upward as much as 50 percent or more.

There are two basic kinds of survivorship life policies:

If you're looking at both actual status and Frasierized illustrations, they will look very different using the same scenarios.

Make sure you purchase a policy from a company that conducts "in-force testing" every year on the policy. This means the insurance company keeps track of your policy as your company's situation changes, thus minimizing the chance that you will get an unpleasant surprise years from now.

Survivorship life insurance is a bargain when compared with individual policies. But you need a full estate plan to make sure the insurance is even necessary.

Otherwise, you'll be paying premiums for years in the future, when you would be better off keeping that money for your own retirement income. Some agents sell this by making you feel wealthy enough to need it, and that can be a nice feeling. But when you are 75 years old, and a those insurance premiums are keeping you from taking the trip of your dreams or even paying for needed medical care, you may be wishing you had not felt so wealthy in your youth.