What is survivorship life insurance designed to do?

Survivorship life insurance, also known as second-to-die insurance, is specifically designed to cover two individuals, typically spouses or partners, and provides a death benefit only after the second insured person passes away. This type of policy is often used in estate planning to help manage taxes and ensure that beneficiaries receive a lump sum after both individuals have died. The benefit can be particularly useful in providing liquidity for estate taxes or other expenses that may arise upon the death of the surviving insured.

The focus of survivorship policies is on the financial implications of both insured individuals passing, rather than on any single individual separately, which differentiates it from other types of life insurance. This makes it a strategic financial tool, particularly for couples looking to leave a legacy or support their beneficiaries financially after both have passed.