Question 39

Survivorship policy is the best option for the couple's needs.

A survivorship policy will provide a death benefit that can be used to cover estate taxes after the second spouse passes away, ensuring that their estate is managed effectively without the burden of tax liabilities.

A) Family policy.

A family policy typically covers multiple family members under one insurance plan but does not specifically address the need to provide a death benefit upon the passing of the second spouse to pay estate taxes. Therefore, it is not the most suitable option for the couple's situation.

B) Joint life policy.

A joint life policy insures two individuals but pays out only when the first person dies. This structure does not align with the couple's goal of having a payout for estate taxes after the second spouse's death, making it an ineffective choice for their needs.

C) Survivorship policy.

A survivorship policy is designed for two individuals, paying out the death benefit only after both have passed away. This makes it ideal for the couple as it will provide funds specifically to cover estate taxes when the second spouse dies, aligning perfectly with their financial planning goals.

D) Universal life policy.

A universal life policy is a type of permanent life insurance that offers flexibility in premiums and death benefits, but it does not specifically focus on the timing of payouts in relation to the deaths of both spouses. Thus, it does not meet the couple's requirement for handling estate taxes after the second death.

Conclusion

The survivorship policy stands out as the most appropriate choice for the couple, as it ensures that a death benefit will be available to cover estate taxes after both spouses have passed away. In contrast, the other options fail to provide the necessary coverage at the right time, confirming that they do not align with the couple's intent to manage their estate efficiently.