In a survivorship life policy, when does the insurer pay the death benefit?

In a survivorship life policy, the insurer pays the death benefit upon the last death of the insured individuals covered by the policy. This type of policy, also known as a second-to-die policy, is designed to provide a benefit that is paid out after both insured individuals have passed away.

The motivation behind this design is often centered around estate planning; it allows beneficiaries to receive a larger sum after the second insured individual dies, which can help cover estate taxes or provide financial support to heirs. Unlike other life insurance policies, where benefits are paid out upon the first insured's death, survivorship policies are specifically structured to defer the payout until the last insured's death. This makes them an effective financial tool for couples or business partners looking to protect their heirs in the long run.