What distinguishes a Joint Life policy from a Joint Survivorship policy?

The distinction between a Joint Life policy and a Joint Survivorship policy is indeed rooted in the timing of the death benefit payout. A Joint Life policy is designed to pay the death benefit as soon as the first insured individual passes away. This can be particularly useful in scenarios where a couple seeks coverage together, as the surviving spouse would receive the payout immediately to help with financial stability after the loss.

On the other hand, a Joint Survivorship policy, also known as second-to-die insurance, only pays out when the last insured individual dies. This structure is typically used for estate planning purposes, allowing for assets to be transferred or taxes to be paid upon the death of both insured parties, rather than just the first.

Understanding the mechanisms behind these policies not only clarifies their primary functions but also their strategic applications in financial planning, such as providing immediate support for one spouse or managing estate taxes efficiently through a delayed payout structure for joint survivorship insurance.