Full Definition
A second-to-die (survivorship) life insurance policy covers two insured individuals — typically spouses — and pays the death benefit only after both have died. Survivorship policies are designed for estate planning because federal estate taxes are typically deferred until the second spouse dies (through the unlimited marital deduction). The death benefit provides liquidity to pay estate taxes when they come due. Survivorship policies are less expensive than individual policies because they insure two lives but only pay one claim. They are commonly owned by ILITs and used in conjunction with wealth replacement trusts and dynasty trusts.
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