Chartered Life Underwriter Practice Exam 2026 - Free CLU Practice Questions and Study Guide

Question: 1 / 400

What characterizes a survivorship life insurance policy?

It covers only one individual and pays upon their death

It covers two lives and pays out upon the death of either insured

It covers two lives and pays out only upon the death of the second insured

A survivorship life insurance policy, also known as second-to-die insurance, is specifically designed to cover two individuals, typically spouses, and it pays a death benefit only after the second insured person passes away. This characteristic makes it particularly useful for estate planning, as it allows the policyholder to secure funds for beneficiaries that may be needed after both insured individuals have deceased. This type of policy can help in covering estate taxes or providing liquidity for heirs, making it a strategic financial tool for couples or partners who want to ensure their heirs are financially secure after both have passed.

Understanding this, it is clear that the defining feature of a survivorship policy is its structure of providing benefits upon the death of the second person, differentiating it from other life insurance policies that typically pay out upon the death of the first insured individual.

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It provides benefits only while both insured individuals are alive

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