Survivorship Life

Survivorship Life insurance is much like joint life insurance in that it insures two or more people for a premium based on a joint age. However, the Survivorship Life policy pays on the last death rather than the first one. Because the benefit is not paid until the last insured dies, the life expectancy is greater and therefore the premium is less. A survivorship policy would be used by business partners who leave estate taxes on the business enterprise, or who wish to leave the heir of business enough money to take over the business itself.

Joint and survivor policies sometimes include a spendthrift clause, especially in the survivor or "second to die" policies. This prevents the beneficiary from reckless spending of the benefits by requiring that the benefits be paid out over time or in fixed installments. The beneficiary cannot change the settlement option and cannot borrow or assign any of the proceeds. The spendthrift clause prevents the creditors of a beneficiary from taking the benefit to pay debts.