How does a joint life policy differ from a survivorship life policy?

A joint life policy is designed to provide a death benefit to the beneficiaries upon the first death of the insured parties. This means that when one person covered by the policy passes away, the policy pays out the death benefit immediately. This feature makes joint life policies particularly suitable for couples or partners who want to ensure that there are funds available upon the death of one party, which can help manage debts, mortgages, or provide financial support to the surviving partner.

In contrast, a survivorship life policy pays the death benefit only after the second insured party passes away. It is typically used in estate planning and can be beneficial for couples who want to leave a legacy for their heirs, as it helps to defer the estate tax liability until both insured individuals have passed.

Understanding this distinction is crucial for anyone in the insurance field, especially as it affects how clients manage their life insurance needs and financial planning.