What are "survivorship policies"?

Survivorship policies, also known as survivorship life insurance or second-to-die policies, are specifically designed to provide a death benefit after the passing of the second insured individual. This type of insurance is often utilized in estate planning, allowing couples or partners to leverage the death benefit to cover estate taxes or provide an inheritance after both have passed away. The key characteristic of these policies is that the benefit is not paid out upon the death of the first insured but rather upon the death of the second insured. This can be particularly advantageous for couples who want to ensure long-term financial security for their beneficiaries without incurring costs for two separate insurance policies. The design of survivorship policies aligns closely with the financial strategies used in estate planning and wealth transfer.