An Introduction to Second-to-Die Life Insurance

In its pure form, Survivorship Life (SL), which is also called second-to-die or last-to-die life insurance, is a life insurance policy or, often, a combination of policies and riders that pays a death benefit only when the last of two or more named insureds dies. It is most frequently used to insure two lives, typically a husband and wife, but some companies offer products that will insure three or more lives.

The three-or-more-insureds policies offer some variation on the last-to-die concept. In some policies, the policyowner may choose at the time of issue at what point the insurer will pay death policy proceeds. For example, if the policy covers four lives, the policyowner could elect to have the insurer pay the proceeds after the third death, rather than the last death. In addition, some of the three-or-more-lives policies allow the policyowner to choose to have multiple payouts. For instance, the policyowner might elect to have the insurer pay the face amount when the first and last, but not the second and third, of four named insureds dies.

The basic policy in a survivorship life plan is generally `a permanent form of life insurance—traditional whole life, current assumption whole life, or universal life—but some companies offer term survivorship life. As a result of competitive pressures in the industry to keep premium costs down, many survivorship life plans now involve a combination of permanent and term life elements.

Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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