What is survivorship life insurance?

Survivorship life insurance is specifically designed to insure two lives and pays out the death benefit only upon the second death. This type of policy is often used in estate planning, as it allows for the payment of death benefits after both insured individuals have passed away, which can help beneficiaries cover estate taxes or other expenses.

This feature makes it distinct from other insurance types that provide coverage upon the first death. The intent behind survivorship policies is to ease the financial burden on heirs who may face significant tax liabilities or other costs after the deaths of both insured individuals. The choice that states that the policy pays upon the second death accurately reflects the fundamental characteristic of survivorship life insurance.

Understanding this concept is crucial for those engaging in estate planning or individuals who are considering how best to provide for their heirs after their passing. It is also essential to differentiate it from other types of life insurance that pay benefits on the first death, which serve different needs and purposes.