How survivorship life insurance works

Survivorship life insurance insures two people and only pays out the death benefit after both have passed away. It's often purchased by a couple as a means of leaving money to their children, estate planning, leaving a sizeable legacy, or funding a support system for a dependent who may require lifetime care. Survivorship life insurance can also be called:

  • Joint survivorship life insurance
  • Second-to-die life insurance

In most cases, joint survivorship insurance is a permanent type of life insurance, such as a survivorship whole life insurance policy or a survivorship universal life insurance policy. Permanent policies last your entire life, and they contain an investment component that accrues cash value over time.

It may be possible to obtain a survivorship policy in the form of term life insurance, but it's not nearly as common as getting a permanent survivorship life policy. With a term life policy, for the death benefit to be paid out, both people on the policy would have to die during the policy term.

Learn more about term vs. permanent life insurance.

What's the difference between a joint life and a survivorship policy?

Technically, a survivorship policy is a type of joint life insurance. A joint life policy is one policy that covers multiple people, usually in the form of joint universal life insurance or joint whole life insurance. The death benefit for joint life policies can be paid out in one of two ways:

  1. First to die: This is the most common type of joint life policy. A first-to-die policy pays out a death benefit to the surviving spouse (or other beneficiaries) after one policyowner dies. In most cases, the death benefit is meant to help the remaining individual cover living expenses or debts and replace any income lost from the other policyowner's death.

  2. Survivorship: Also known as second-to-die, a survivorship policy only pays out a death benefit once both people covered by the policy have died. These policies often leave behind an inheritance to the insureds' heirs, permanent dependents, or charity.

Pros and cons of joint survivorship life insurance?

There are several advantages of a joint survivorship policy, including these pros:

  • Estate planning: A survivorship life insurance policy can help in estate planning as a means of leaving money and assets behind while potentially accessing some tax advantages. Consult a tax advisor to understand the tax implications of survivorship life insurance.
  • Creating an inheritance for heirs: A survivorship policy can be a way to leave a nest egg for your heirs to claim once you and your partner have passed away.
  • Providing care for permanent dependents: If you and your partner have a permanent dependent, a survivorship policy can be used to provide for them once you've both passed.
  • Two individual policies are too expensive: A survivorship policy can be more affordable than getting two individual permanent life insurance policies, potentially allowing you to purchase more coverage than you'd otherwise be able to.
  • Trouble getting a policy: If one of you is having trouble qualifying for life insurance due to your age or health, a survivorship policy can be a way to get coverage or to increase the coverage you're eligible for. That's because both policyowners will be factored into your eligibility rather than just one.
  • Partner can use cash value: While the death benefit can't be paid out until both people on the policy have died, the surviving partner can tap into the policy's cash value, if needed, via a life insurance loan.

Second-to-die joint survivorship policies aren't for everyone. The cons of survivorship life insurance include:

  • One death benefit: Survivorship policies might not be the choice for couples in good health who can afford the premium for two separate policies. Separate policies allow for the payment of two death benefits, one after each policyowner dies.
  • Partner can't be a beneficiary: If you'd like to use life insurance to provide for your partner when you die, you'll need to get separate life insurance policies or a first-to-die joint life policy since survivorship policies require both insureds to pass away before paying out.
  • Life changes over time: Survivorship policies can be difficult to update in cases of divorce or other significant life changes. When shopping for a survivorship policy, consider asking if it will be possible to split the policy in such instances.

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