What is survivorship life insurance?

Survivorship life insurance is a type of joint life insurance policy designed to cover two people on a single policy. These policies, also known as second-to-die joint life insurance, only pay out a death benefit once both policyholders have died. Joint survivorship life insurance is typically less expensive than two separate permanent policies. It can be helpful in estate planning if you want to leave a benefit for heirs, permanently dependent children, or even a favorite charity. Although married couples often purchase this coverage, the joint policyholders aren't required to be married.

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How does survivorship and joint life insurance work?

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. Conversely, both parties could survive the policy term and receive no payout.

Learn more about term vs. whole life insurance.

What is the difference between survivorship and joint life insurance?

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:

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.
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 joint life insurance 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: Joint life 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.

How are joint life insurance policies helpful in estate planning?

A joint life insurance policy can be an effective estate planning tool. The insureds can name their estate or a trust as the beneficiary of the policy. In this way, the death benefit can pay off remaining debts, estate taxes and other final expenses so as to preserve the value of the estate. Be sure to consult a tax advisor to better understand the tax implications of joint life insurance.

Joint survivorship life insurance is a permanent cash value policy, which pays a death benefit to beneficiaries, and is best suited to those who want lifelong coverage. A joint life policy can be an effective estate planning tool, a way to help cover long-term care, and leave a legacy for your heirs.

Choose joint life insurance with the death benefit that meets your needs

You can get life insurance quote online by answering some questions and exploring your options for death benefit amounts, and other issues related to the lifelong coverage of whole life insurance. Call 1-866-912-2477 to speak with a licensed, Progressive Life by eFinancial representative who can help you choose the best policy for your goals.