What is a critical aspect of a survivorship life policy?

A survivorship life policy, also known as a second-to-die policy, is specifically designed to pay out a death benefit only after the second insured individual passes away. This type of policy is typically used for estate planning and ensuring that heirs receive a benefit that can cover estate taxes or provide financial support when both parents or spouses have died.

The primary advantage of this arrangement is that it can be more affordable than individual policies since the risk to the insurer is lower—the benefit is not paid until the death of both insureds. This makes it a valuable tool for couples, particularly for those looking to leave a legacy or manage estate implications.

In contrast, other options describe features of different types of policies. While some life insurance products do indeed pay out upon the first death or accumulate cash value, they do not reflect the specific nature of survivorship life insurance. Additionally, while survivorship policies are commonly used by married couples, they are not limited to them; they can also be taken out by business partners or other individuals as well.