What is the primary function of Survivorship Life Insurance?

Survivorship Life Insurance, also known as second-to-die insurance, is designed to provide a death benefit that is paid out after the death of the second of two insured individuals. This type of policy is primarily used in estate planning to ensure that beneficiaries receive a financial benefit after both policyholders have passed away. The funds can be used to cover estate taxes, providing a financial legacy to heirs or other beneficiaries without the risk of being immediately taxed upon the second death.

This structure makes survivorship life insurance particularly attractive for couples and business partners, allowing them to secure the financial well-being of their heirs without the immediate payout triggered by the death of an individual policyholder. Thus, the essence of survivorship life insurance lies in its function to provide benefits after the death of both policyholders, ensuring that financial obligations are met and leaving behind a financial resource for the designated beneficiaries.