What is last survivor life insurance?

Last Survivor life insurance, or survivorship life insurance, is a type of joint whole life insurance designed mainly for married couples.

Federal estate taxes are not collected on property left to a spouse, but when the surviving spouse dies, estate taxes are due and can be very high. A last survivor policy pays a benefit only after both spouses have died, providing funds for estate taxes.

For Insurance, a free service that connects consumers with agents and policies, lists these three advantages of last survivor life insurance over individual coverage:

Lower premiums � more cost effective than two individual policies. Medical underwriting standards may be eased with respect to one of the insured's, due to second death payouts. Lower "economic benefit" reportable for income taxes in Split Dollar Plans (often 10 times lower).

Joint Life Insurance or Survivor Life is a permanent form of life insurance, which covers two or more individuals (insureds), and pays a claim upon the death of either person.

Upon the death of the first insured the second insured receives the death benefit; this form of insurance is known as "First to Die." One of the benefits of this type of insurance is that the surviving person can elect to continue the insurance contract as an individual without proof of insurability. In addition, since the premium is based on the average age of both insureds, the single premium is less expensive; however, both insureds must be underwritten independently.

Generally, this type of policy provides protection for a husband and wife, or two business partners related to a buy-sell agreement or a business continuation plan.

Another type of Join Life insurance is Survivorship Life or "Second to Die." This type of policy is used in estate planning because is defers the payment of the death benefit unit the second death, and the subsequent death benefit is used to pay estate taxes. The face amount of a Survivorship Life policy usually is established at minimum of 1 million dollars.