Texas Life Agent Practice Exam

A life insurance policy that covers two parties but only pays when the last party dies is known as?

1. Joint Life

2. Survivorship Life

3. Whole Life

4. Universal Life

The correct answer is: Survivorship Life

The term that describes a life insurance policy covering two parties but only providing a benefit when the last person dies is known as Survivorship Life. This type of policy is specifically designed for situations where there is an estate or financial planning strategy in place, typically for couples or business partners. It is often used to ensure that sufficient funds are available to pay estate taxes or to provide for heirs after the final death. Survivorship life policies are appealing because they usually offer lower premiums than two separate individual life insurance policies. The payout is deferred until the death of the last insured, making it a financial tool that can be integrated into wealth distribution plans. The other types of policies mentioned serve different purposes. Joint Life policies cover two individuals and pay out upon the death of the first one. Whole Life and Universal Life policies are forms of permanent life insurance offering cash value accumulation through savings components, but they do not specifically address the deferred payout structure that characterizes Survivorship Life. Thus, the choice of Survivorship Life accurately reflects the definition provided in the question.