What scenario typically leads to a death benefit payout in survivorship life insurance?

In survivorship life insurance, the death benefit is designed to be paid out only after the death of both insured individuals. This type of policy is often used by couples, such as spouses, to ensure that funds are available for beneficiaries after both individuals have passed away. The reasoning behind this approach includes providing financial stability to heirs, as the policy can help cover estate taxes, debts, or provide an inheritance.

The structure of survivorship life insurance makes it an attractive option for those looking to preserve wealth and ensure that their assets are passed on to the next generation. The benefit is not triggered by the death of the first insured person, which leads to differences compared to traditional individual life insurance policies where a payout occurs upon the death of the insured individual. Instead, it's specifically designed to maintain coverage until both parties are deceased, thus emphasizing the importance of planning for the long-term financial needs of beneficiaries.