Survivorship life insurance

A survivorship life insurance policy covers two people and only pays out the death benefit when both parties have died. It’s not the best policy for most people, so who is this policy for?

Nupur GambhirRebecca Shoenthal author photo


Nupur Gambhir

Nupur Gambhir

Life Insurance Expert

Nupur Gambhir is an insurance editor at Policygenius and licensed Life, Health, and Disability agent in New York.


Rebecca Shoenthal

Rebecca Shoenthal

Licensed Insurance Expert

Rebecca Shoenthal is an insurance editor and licensed Life, Health, and Disability agent at Policygenius in New York City. Previously, she worked as a nonfiction book editor. She has a B.A. in Media and Journalism from the University of North Carolina at Chapel Hill.

Updated January 15, 2021|5 min read

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Married couples shopping for life insurance have two options: separate or joint policies. Most couples buy individual life insurance policies for each person, but some couples choose a single, joint life insurance policy that covers both partners.

When purchasing a joint life insurance policy, you choose between a first-to-die life insurance policy or a survivorship life insurance policy, also known as second-to-die. A survivorship life insurance policy isn’t right for most couples because it delays the payout of the death benefit. But it can be a useful estate planning tool, a coverage option for a spouse in poor health, or financial support for lifelong dependent children. Read on to learn if second-to-die life insurance makes sense for you.

Key Takeaways

  • A joint life insurance policy provides coverage to married couples even if one spouse doesn’t typically qualify for coverage

  • Couples with specific estate planning needs or parents of children with disabilities benefit most from second-to-die life insurance

  • Most couples should opt for separate term life insurance policies

What is survivorship life insurance?

Survivorship life insurance is a type of joint life insurance that insures two people instead of one. Most joint life insurance policies are permanent policies, which last your entire life and often have an investment component called the cash value. However, some joint life insurance policies are term life insurance policies, which last for a set period of time.

Survivorship life insurance policies are best purchased as permanent policies because they tend to serve permanent needs.

What is the difference between joint life and survivorship life insurance?

Survivorship life insurance is a type of joint life insurance, along with first-to-die life insurance. A first-to-die life insurance policy pays out the death benefit when the first of the two spouses passes away, but a survivorship life insurance policy pays out the death benefit only after both policyholders die.

How does survivorship life insurance work?

When a couple applies for life insurance, they go through the underwriting process together to receive their policy.

But unlike single policyholder life insurance, a survivorship policy doesn’t pay out after the first spouse dies. Instead, the remaining policyholder continues to pay the premiums in order for the beneficiaries to eventually receive the policy’s death benefit.

This makes survivorship life insurance less useful as an income replacement and is usually bought to protect the financial health of future generations.

Some of the advantages of a second-to-die life insurance policy include:

  • Potentially lower premiums than first-to-die policies or individual policies

  • Easier for less-healthy people to qualify for than an individual or first-to-die policy

  • Can build up cash value

These advantages, however, are only applicable to individuals with specific conditions that make a survivorship life insurance policy’s delayed payout worthwhile.

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When should you buy a survivorship life insurance policy?

There are a few major reasons you might purchase a survivorship life insurance policy:

Supplying care for permanent dependents

If you have a dependent who relies on you permanently, such as a child with disabilities, a survivorship life insurance policy ensures that you’re leaving money behind so they can be taken care of for the rest of their life. The policy could be funded into a special needs trust for the dependent to have some income if both parents are no longer around to support them.

Estate planning

If you want to leave money or assets behind to heirs or want to allow your loved ones to avoid federal state taxes and income taxes, survivorship life insurance is a good option. The policy’s main purpose is maximizing your estate and providing liquidity.

Most of these policies are owned by irrevocable trusts — also known as irrevocable life insurance trusts or ILIT — a common way to handle estate planning, and one that should involve a financial planner and attorney.

By law, a spouse can leave their spouse unlimited assets without incurring federal taxes, but the same tax exemptions do not extend to other beneficiaries. A survivorship life policy allows beneficiaries who are not part of the couple — like children or nieces and nephews — to receive a death benefit to pay an estate tax bill.

You can’t afford two individual policies

For the most part, purchasing a permanent life insurance policy can be five to 15 times more expensive than purchasing a term life insurance policy. But permanent survivorship life insurance policies can sometimes be less expensive in the long run.

If purchasing an individual policy is too costly, either because you want a permanent policy or because of your advanced age or poor health, purchasing a second-to-die policy with your partner can ensure that your dependents will still receive financial support when you and your spouse die.

One spouse was declined, but the other is in good health

If a couple wants both partners to have insurance coverage but is unable to secure coverage for one of them (usually due to poor health or an underlying medical condition), a joint policy covers them both under a single policy.

There’s a need for the cash value of a life insurance policy

Survivorship policies can be structured to help the surviving spouse through the cash value of the policy. Though the death benefit won’t pay out until both policyholders have died, some permanent policies can build up a cash value that can be accessed while one of the spouses is still alive. If the policy builds enough cash value, the surviving spouse can borrow from the policy and pay final expenses or the policy premiums, all while the policy is still in force. .

While this may seem like an attractive option, if you’re not planning for your estate or you don’t have lifelong dependents, there are better ways to ensure the financial security of your spouse. The cash value of a life insurance policy can take decades to build and isn’t always immediately available.

→ Learn more about how cash value life insurance works

Speak to a financial advisor or a Policygenius agent to figure out if survivorship life insurance is your best option.

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Who shouldn’t get survivorship life insurance?

Most couples should opt for individual term life insurance policies instead of survivorship life insurance. In addition to the main deterrent – joint life insurance does not immediately pay out if one spouse dies – it can also be difficult to split up in the event of a divorce.

Is a survivorship life insurance policy worth it?

For people in generally good health who need life insurance to replace their income when they die, a survivorship life insurance policy isn’t the best choice for coverage.

But if you’re using life insurance as an estate planning tool and want to ensure your heirs get the death benefit, then a survivorship life policy can work to your benefit. Alternatively, if you or your spouse are in poor health and can’t get an affordable policy on your own, then a survivorship life insurance policy allows you to get some coverage.

You should consult with a life insurance agent to determine whether or not a survivorship life insurance policy is the best option for your individual circumstances.

Frequently Asked Questions

What is a survivorship life insurance policy?

Also called “second-to-die life insurance,” this is a type of joint life insurance policy in which the death benefit only pays out once both policyholders have died.

How many people does a survivorship life insurance policy cover?

Two people who share financial interests – usually a couple – are covered under a survivorship life insurance policy.

How are survivorship life insurance policies helpful in estate planning?

A survivorship life insurance policy’s death benefit can be used by heirs to pay estate or inheritance taxes.

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