What Is a Survivorship Life Insurance Policy?

There are many different types of life insurance policies to meet your specific needs. Survivorship life insurance is a policy that covers two people instead of one. Here we’ll cover the benefits of a survivorship policy, how they work, and whether this type of policy might be right for you.

What is a survivorship life insurance policy?

Survivorship life insurance covers two people on one policy. This type of policy is typically for spouses. It is also known as a second-to-die joint life insurance policy. The policy does not pay out until both people on the policy have passed away.

A survivorship life insurance is typically a permanent whole or universal life policy. It costs less than two separate policies and is an affordable way to leave more behind for your beneficiaries.

Benefits of a survivorship life policy

In a first-to-die joint life insurance policy, the life insurance company pays out the death benefit after the first person on the policy passes away. Since a second-to-die policy pays out after both spouses have passed away, a survivorship life insurance policy is not used for income replacement for a surviving spouse.

The benefits of a survivorship life policy are best for estate-planning purposes.

  • Paying estate taxes: This policy is used by high-net-worth households for estate planning strategies. After the second spouse passes away, the death benefit from the policy can be used to pay estate taxes. This will help ensure that your heirs do not have to sell any assets to pay the estate taxes.
  • Caring for a special needs child: The death benefit can pay for care that a special needs child requires. Survivorship policies are often used to fund a trust to provide care for them.
  • Leaving a legacy: The death benefit from the policy can help any beneficiary
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