A life insurance policy that pays a death benefit only after both spouses have died is known as what?

• A. Term life policy
• B. Whole life policy
• C. Universal life policy
• D. Second-to-die policy

Answer: (D)

In estate planning, a survivorship or second-to-die policy is a life insurance arrangement that covers two lives and pays the death benefit only after the second spouse dies. This structure is ideal for providing liquidity to a couple’s estate to cover final expenses or estate taxes, ensuring heirs can inherit assets without force-sale burdens. Because the benefit isn’t triggered until both lives have ended, it’s different from standard single-life policies.

Term life covers a single person for a specified period and pays only if that person dies within the term. Whole life and universal life insure one person for life (with potential cash value features) and pay when that individual dies, not after both spouses. The second-to-die policy is specifically designed for two lives and a payout on the later death, which is why it’s the best fit for the scenario.