L&HNationalmedium
A married couple is comparing a Joint Life (first-to-die) policy with a Survivorship (second-to-die) policy. The Survivorship policy is most commonly used for:
Funding federal estate tax liability that comes due at the death of the surviving spouse under the unlimited marital deduction
BIncome replacement for the surviving family and dependents when the first of the two insured spouses dies prematurely
CPaying off the entire remaining family mortgage balance immediately upon the death of the first of the two spouses to die
DProviding immediate cash liquidity to cover funeral, burial, and final medical expenses at the time of the first spouse's death
Why this is the answer
Joint Life (first-to-die) pays on the first insured's death and is used for income replacement, mortgage payoff, or business buy-sell where loss of either party triggers the need. Survivorship Life (second-to-die) pays only when both insureds have died. The classic use case is estate-tax liquidity: under IRC §2056, transfers to a US-citizen spouse pass tax-free, deferring federal estate tax until the survivor's death. Survivorship life is dramatically cheaper than two separate policies because the carrier waits for both deaths.
Studying for the Life & Health exam?
This question comes from our L&H bank. Take a free practice test — no signup.