A survivorship policy is commonly used to fund estate planning by paying out on the death of which insured?

• A. The first insured
• B. The second insured
• C. The death of the second insured
• D. The last living insured

Answer: (C)

In estate planning, survivorship life insurance is designed to provide funds when both insured individuals have died. The policy pays out on the death of the second insured, meaning the benefit becomes available after the last surviving person passes away. This structure is valuable because estate taxes and settlement costs often arise after the second death, so having liquidity then helps heirs preserve other assets and avoid forced sales.

If the policy paid on the first death, the funds would be available too early for most estate tax needs, defeating the typical purpose of a survivorship policy. Paying at the second death ensures the benefit is there when it’s most useful for settling the estate. Therefore, the event that triggers the payout is the death of the second insured.