What is "survivorship" in life insurance?

Survivorship in life insurance refers to policies that are structured to pay out benefits only after both insured individuals have passed away. This type of policy is often associated with joint life policies, which are typically utilized in estate planning, particularly for couples or partners who want to ensure that their heirs receive a benefit only after their deaths.

The main purpose of a survivorship policy is to provide liquidity to the estate, allowing beneficiaries to cover estate taxes or to leave a legacy after the last surviving individual has died. This can be particularly beneficial for couples who want to ensure that their children or other heirs receive funds only after both parents are deceased, supporting a more strategic approach to wealth transfer.

The other options involve scenarios where benefits are paid upon the death of one insured or cover different types of situations, which do not align with the definition of survivorship in this context. Thus, the correct understanding of survivorship reflects the delay in payout until both parties covered by the policy have passed away.