Many retired couples take required minimum distributions they don’t need to live on. Redirecting those after-tax dollars into a survivorship life policy can turn a taxable distribution into a larger, income-tax-free inheritance. Getting the case approved, though, takes careful preparation.
Key takeaways
- RMDs generally begin at age 73; unneeded distributions can be repositioned into second-to-die coverage.
- Survivorship life pays at the second death, when heirs face the SECURE Act 10-year rule and possible estate or state taxes.
- Underwriters need a real purpose — estate liquidity, equalization or asset distribution — not just “increase the legacy.”
“To increase the legacy” is not a purpose underwriters accept. Estate liquidity, inheritance equalization and ease of distribution are.
Why RMDs and survivorship life fit together
RMDs generally begin at age 73. Clients with enough other income often reinvest these distributions or leave them in a taxable account. When the IRA eventually passes to children, most non-spouse heirs must empty it within 10 years under the SECURE Act, often during their own peak earning years. Using the after-tax RMD to pay premiums on a survivorship (second-to-die) policy creates an income-tax-free death benefit at the second death, which can offset those taxes or simply leave heirs more. See IRA planning under the SECURE Act.
The underwriting challenge
Many middle-market retirees don’t have traditional financial justification. With a federal estate tax exemption of $15 million per person ($30 million per couple) from 2026, most won’t owe federal estate tax, and retirees have little earned income to replace. Carrier marketing sometimes promotes RMD strategies, but underwriters decide what gets issued.
Percent-of-net-worth justification
Many carriers are open to coverage for estate liquidity, inheritance equalization or making assets easier to divide. Some will allow coverage as a percentage of the client’s net worth, even without traditional need. The percentage varies by carrier, and existing coverage counts against it. State estate or inheritance taxes, which can apply at much lower levels than the federal tax, can also support a stated purpose.
How we help you place the case
Don’t just submit an application and hope. Share the client’s situation with us and we’ll informally shop it with receptive carriers. When you submit, we can write a cover letter that explains the purpose clearly. It’s worth the effort: a permanent policy on an older couple is a meaningful case for the client and for you. See also RMDs in life insurance sales.
Frequently asked questions
Can I use my RMD to pay for life insurance?
Yes. Once the RMD is withdrawn and taxes are paid, the remaining money can be used for any purpose, including premiums on a life insurance policy such as survivorship life.
Why use survivorship life for an RMD strategy?
Survivorship life insures two people and pays at the second death, which is when an inheritance passes to children. It usually costs less than two individual policies.
How do underwriters justify coverage for retirees?
Many carriers allow coverage based on a percentage of net worth for estate liquidity, equalization or ease of distribution. The stated purpose matters, so a clear cover letter helps.
Reviewed by Tim Fuller on 2026-09-26
Tim Fuller
President, SRS Inc.
Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.
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