What is Life Insurance (Survivorship/Second to Die)?
Survivorship life insurance, also known as second-to-die life insurance, is a type of joint life insurance policy that covers two people, typically spouses. Unlike individual life insurance, this policy pays out a death benefit only after both insured individuals have passed away. It's often used as part of estate planning to provide financial support to heirs, cover estate taxes, or fund trusts.
Who Needs It
This type of life insurance is most commonly used by married couples with substantial estates or long-term financial planning needs. It can be beneficial for:
- Couples looking to leave a legacy for children or grandchildren
- Families with estate tax concerns
- Parents of children with special needs who require long-term financial support
- Business partners with succession planning needs
What It Typically Covers
Survivorship life insurance provides a lump-sum payment to the designated beneficiaries after both insured individuals have died. The proceeds can be used to:
- Pay estate or inheritance taxes
- Provide financial support to family members
- Fund trusts or charitable giving plans
- Support business succession plans
Common Exclusions and Limitations
Like most life insurance policies, survivorship policies may contain exclusions such as:
- Death due to suicide within the first two years of the policy
- Fraud or misrepresentation on the application
- Deaths resulting from criminal activity
Additionally, since the benefit pays out only after both insured parties pass away, it does not provide financial support to the surviving spouse.
Factors That Influence Cost
Several factors affect the cost of a survivorship life insurance policy, including:
- The age and health of both insured individuals
- Policy face amount (death benefit)
- Type of policy (whole life vs. universal life)
- Riders or additional benefits added to the policy
Because the policy only pays after both deaths, premiums are often lower than two individual policies combined.
Proof of Insurance & Compliance
Once your policy is active, you’ll receive a policy document that serves as proof of insurance. Requirements may vary by state, especially when used in estate planning or trust funding. It’s important to consult with a qualified advisor for guidance on using survivorship life insurance to meet specific legal or financial needs.
How to Get a Quote
Getting a quote for survivorship life insurance is simple. Provide basic information about both individuals to start comparing options. Get a quote today.
Frequently Asked Questions
How does survivorship life insurance differ from regular life insurance?
Unlike individual life insurance, survivorship policies cover two people and pay out only after both have passed away.
Can one person cancel the policy after the other dies?
Most survivorship policies cannot be canceled by one party after the death of the other, as the policy is designed to pay out after both deaths.
Is medical underwriting required for both insureds?
Yes, both individuals typically go through underwriting, though some policies may offer simplified or guaranteed issue options.
Can I use survivorship life insurance to fund a trust?
Yes, many people use these policies to fund irrevocable life insurance trusts (ILITs) for estate planning purposes.
What happens if one person dies shortly after the policy is issued?
The policy remains active and the benefit is paid only after the second insured person passes away.
Still have questions? Talk to a local insurance expert.