West Virginia State Life Insurance Practice Exam

What type of life policy covers two people and pays out upon the death of the last insured?

1. Joint Life

2. Term Life

3. Survivorship Life

4. Whole Life

The correct answer is: Survivorship Life

The type of life policy that covers two people and pays out only upon the death of the last insured is known as a survivorship life policy. This type of insurance is specifically designed for individuals who want to provide a death benefit to their beneficiaries only after both insured individuals have passed away. Survivorship life policies are often used in estate planning, as they can help ensure that funds are available for heirs or beneficiaries upon the death of the second insured, allowing for the payment of estate taxes or the transfer of wealth in a more tax-efficient manner. The premium is typically lower than that of two separate individual life policies since the insurer will only pay out when the last insured dies, which creates a longer potential payout delay. Other types of life insurance, like joint life insurance, cover two people and pay out at the death of the first insured, which distinguishes it from survivorship life. Term life and whole life policies focus on individual policies and do not inherently involve multiple insured parties or defer the benefit until the last policyholder's death.