Which policy pays the death benefit on the second death when two or more lives are insured?

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Multiple Choice

Which policy pays the death benefit on the second death when two or more lives are insured?

In life insurance, a policy that pays the death benefit after the second death is survivorship life, often called a second-to-die policy. This type covers two or more lives under one contract and doesn’t pay out until the last insured dies. It’s commonly used in estate planning to provide liquidity for estate taxes or to help with wealth transfer to heirs, since the death of both individuals typically triggers the tax or transfer event. Premiums are calculated based on the ages and health of all lives insured, and because the payout occurs later (after both have died), the policy can be priced differently and sometimes lower than getting separate policies for each person, depending on the situation. In contrast, a joint life policy pays out at the first death, which is why it’s used when the need is for a quick settlement of affairs after one person passes. Juvenile life covers a child and pays on that child’s death, and group life is tied to an employer or association and pays out for the insured’s death within the group plan.

In life insurance, a policy that pays the death benefit after the second death is survivorship life, often called a second-to-die policy. This type covers two or more lives under one contract and doesn’t pay out until the last insured dies. It’s commonly used in estate planning to provide liquidity for estate taxes or to help with wealth transfer to heirs, since the death of both individuals typically triggers the tax or transfer event.

Premiums are calculated based on the ages and health of all lives insured, and because the payout occurs later (after both have died), the policy can be priced differently and sometimes lower than getting separate policies for each person, depending on the situation.

In contrast, a joint life policy pays out at the first death, which is why it’s used when the need is for a quick settlement of affairs after one person passes. Juvenile life covers a child and pays on that child’s death, and group life is tied to an employer or association and pays out for the insured’s death within the group plan.

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