What Is Survivorship Life Insurance?

Survivorship life insurance, sometimes called second-to-die insurance, is one of two types of joint life insurance for couples. It pays out after both partners have died. It’s typically tailored to affluent couples who want to protect their heirs from the costs of estate and inheritance taxes.

How Does Survivorship Life Insurance Work?

Survivorship life insurance pays out only after both covered parties die. There is no benefit paid on the first policyholder death.

This makes survivorship life insurance a better option for people who want to leave money to the couple’s heirs rather than to the surviving spouse.

Most of these second-to-die life insurance policies are typically permanent life insurance policies — either universal life policies or whole life policies.

There are also variable survivorship life insurance policies. These allow you to invest a portion of each premium payment in a selection of investment options based on the policy. The policyholder assumes all the risk of the investments which can affect the policy’s cash value.

Other Names for Survivorship Life Insurance
  • Second-to-die life insurance
  • Last-survivor life insurance
  • Survivorship variable life insurance
  • Variable survivorship life insurance
  • Joint survivor life insurance

Differences between Survivorship Life and Other Joint Life Policies

Survivorship life insurance, also known as second-to-die life insurance, is one of two types of joint life insurance. The other is called first-to-die life insurance.

Joint life insurance typically covers a married couple or partners in some other relationship. It can sometimes be cheaper than having two individual policies for the partners.

The chief difference between survivorship life insurance and other types of joint life coverage is about who you want to benefit from the payout.

First-to-die life insurance pays out after the first partner’s death. Its payout benefits your partner if you die.

Survivorship, or second-to-die, life insurance pays out only after both partners have died. Its payout is designed to benefit the couple’s heirs.

Should You Get Survivorship Life Insurance?

Survivorship life insurance is primarily designed to benefit the couple’s heirs by helping offset inheritance and estate taxes. These can have rates up to 40 percent, but usually don’t affect most people unless you have a very large amount of assets at the time of your death.

For instance, you would have to have at least $11.58 million in assets before your estate would be subject to the federal estate tax in 2020. For that reason, survivorship insurance is best suited for affluent couples.

Since survivorship life insurance pays out only after both members of a couple die, it may not be the best type of life insurance for everyone. There will be no payout for the surviving member when their partner dies.

It can also be difficult to split a survivorship policy into individual policies if the couple divorces. You should ask that the policy include a divorce rider to cover this possibility, regardless of how remote it may seem.

You should consider survivorship life insurance:
  • If you want to preserve family wealth as part of your estate planning.
  • To leave a charitable gift after the couple’s deaths.
  • To pass on a family business to your heirs.
  • When one partner is uninsurable due to health or other issues.
  • If you can’t afford an individual term life insurance policy.
  • Should you want to guarantee care for a special needs child after both partners die.
  • If you want to create wealth for your heirs.
  • If you want to protect income for a dependent.

Pros and Cons of Survivorship Life Insurance

The advantages of survivorship life insurance are best suited to help preserve a legacy for a couple’s heirs. The disadvantages make it less suitable for a surviving spouse.

You should consider what you want a life insurance policy to accomplish for you and your family before deciding on any type of joint life insurance policy.

Advantages and Disadvantages of Survivorship Life Insurance
Advantages
  • Usually less expensive than two individual policies.
  • Customizable with riders that can be tailored to your particular situation or circumstances.
  • Can build cash value through investing a portion of your premiums.
Disadvantages
  • May be problematic to split if the couple divorces.
  • No payout on the death of the first partner, meaning no benefits for the surviving partner.
  • There may be a long wait for a final death benefit payout depending on how long the surviving partner lives.
Last Modified: October 16, 2020

4 Cited Research Articles

  1. California Department of Insurance. (2018, March). Life Insurance Guide. Retrieved from http://www.insurance.ca.gov/01-consumers/105-type/95-guides/07-life/life-ins-guide.cfm
  2. AARP. (2007). Life Insurance. Retrieved from https://assets.aarp.org/www.aarp.org_/articles/money/financial_planning/LifeInsurance.pdf
  3. Arizona Department of Insurance and Financial Institutions. (n.d.). Glossary of Life Insurance Terms. Retrieved from https://insurance.az.gov/glossary-life-insurance-terms
  4. New York State Department of Financial Services. (n.d.). Types of Policies. Retrieved from https://www.dfs.ny.gov/consumers/life_insurance/types_of_policies