Survivorship life insurance, also called second-to-die or last-survivor life insurance, covers two insured individuals under one contract but does not pay the death benefit until the second insured dies. Therefore, it pays upon the death of the last surviving insured.

This structure distinguishes survivorship life from traditional joint life or first-to-die insurance. A first-to-die policy pays when the first insured dies and ordinarily terminates after the death benefit is paid. Survivorship insurance continues after the first death because the insured event triggering payment is the death of the second person.

The arrangement is frequently associated with estate-planning needs because estate taxes, wealth-transfer costs, or inheritance equalization needs may become significant after both spouses have died. It can also be used for certain business or legacy-planning objectives.

A family income policy is designed to provide income benefits for a stated period following the insured ' s death. A family policy generally combines coverage for family members, frequently through a base policy plus term riders. Credit life insurance is designed primarily to discharge a covered debtor ' s outstanding obligation.

Thus, the defining phrase “death of the last insured” identifies survivorship life insurance.

Study Guide Reference: Types of Life Insurance Policies — joint life; survivorship/second-to-die life; family policies; specialized uses of life insurance.