Survivorship life insurance: How it works & when to buy

This type of joint life insurance isn't very common, although it is sometimes used for estate planning purposes or to help someone get covered who couldn't do so individually.

Going unnoticed amongst the many different types of life insurance is one policy that offers some unique features and advantages: survivorship life insurance.

Many couples shopping for life insurance opt for separate life insurance policies when a joint policy covering both partners would be more beneficial. This usually happens because the couple is unaware of survivorship life as an option or the life insurance agent’s company didn’t offer it.

To help you better understand survivorship life insurance, this article will delve into what it is, how it works, when it makes sense to buy it — and when it doesn’t.

What is survivorship life insurance?

Survivorship life insurance, also known as “second-to-die life insurance,” is a type of insurance that insures two people instead of just one. Although they can be term life insurance policies, most joint life policies are permanent life insurance policies, which last your entire lifetime and often have a savings component known as “cash value.” The majority of survivorship life insurance policies bought are permanent policies because they usually serve permanent needs.

Is joint-life the same as survivorship life insurance?

Survivorship life insurance is one type of joint life insurance, along with first-to-die life insurance. With a first-to-die policy, the death benefit is paid out when the first of the insured parties dies, whereas a survivorship life insurance policy pays out on the second death.

How does survivorship life insurance work?

Like most life insurance policies, the couple applying for a survivorship life policy must go through the underwriting process in order for the life insurance company to evaluate their insurability.

If a policy is issued, a death benefit will be paid out only after the second spouse dies, not when the first spouse passes away. After the first spouse dies, the surviving spouse will continue to pay the premiums to keep the insurance in force and provide a death benefit to the beneficiaries.

Because it only pays upon the second death, survivorship life insurance isn’t as valuable as an income replacement tool to benefit the surviving spouse; it’s usually bought for the objective of protecting the financial health of future generations.

Survivorship life policies offer several advantages, including:

  • The cash value of the policy grows over time and can be withdrawn or borrowed
  • It’s is easier for people with pre-existing medical conditions to qualify than it is for an individual or first-to-die policy
  • The premiums are potentially lower than other types of permanent life insurance or first-to-die policies

Although these are advantages of survivorship life policies, this type of policy's delayed payout is not advantageous to everyone.

When is survivorship life insurance a good choice?

Under some circumstances, survivorship life is a solution that makes sense. Here are some of those situations.

It ensures care for permanent dependents

If you have a dependent for whom you are permanently financially responsible, such as a special needs child or someone with a permanent disability, a survivorship life policy ensures that the policy’s death benefit will meet their financial needs for the rest of their life. An attorney may recommend that a “special needs trust” be created for income distribution to the dependent.

It’s an excellent estate planning tool

Survivorship life insurance is beneficial if your estate may be liable for substantial estate taxes and you want to leave money behind to allow your beneficiaries to avoid using other assets for the payment of estate taxes. The policy maximizes your estate and provides liquidity.

Most survivorship life policies are owned by a type of trust known as an “irrevocable life insurance trust” or ILIT, a commonly used tool in estate planning that your financial planner and attorney can set up for you.

Estate tax laws dictate that when the first spouse dies, the surviving spouse is not liable for any estate taxes due. The taxes are due upon the second death, making survivorship life insurance the perfect product to provide a tax-free benefit to your loved ones that can be used to pay any estate taxes that are due.

It helps people who have been declined life insurance become insured

For a couple that wants both partners to have life insurance coverage, but one of them is uninsurable because of poor health or an underlying medical condition, a joint policy will cover both of them under a single policy. Coverage is not guaranteed when you apply, but the underwriting for survivorship life policies is more liberal than it is for individual policies.

Individual insurance is unaffordable for someone

When purchasing individual insurance proves too costly because of their age or health condition, a survivorship life policy will cover both partners under one policy at a more affordable rate. This ensures that your heirs will receive financial support when you and your partner pass away.

Cash value is needed

Survivorship life insurance can help a surviving spouse through a policy’s cash value if it’s a permanent life insurance policy. Though it can take decades to build up, the surviving spouse can use the cash value to pay policy premiums or pay for final expenses.

A survivorship life insurance policy isn’t the best option when life insurance proceeds are needed after the first spouse's death to pay for medical bills, retire a mortgage, fund a child’s education, or for a variety of other financial needs.

Survivorship life can also be difficult to split up in the event of a divorce because of surrender charges that may apply to the policy and the division of the cash value.

Is survivorship life insurance worth buying?

If you and your spouse are in good health and a life insurance payout is needed to replace income when one of you dies, survivorship life isn’t the best choice.

However, if the policy's purpose is to be used as an estate planning tool, a survivorship life policy may be worth buying. It’s also an excellent alternative if you or your spouse are in poor health and can’t obtain affordable life insurance individually.

A final word

Estate planning can be an arduous and complicated process. You should consult a financial planner, life insurance agent, or attorney to determine if a survivorship life insurance policy will be the best option for your circumstances.


Having grown up in upstate New York, Bob Phillips spent over 15 years in the financial services world and has been making freelance writing contributions to blogs and websites since 2007. He resides in North Texas with his wife and Doberman puppy.

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