66. A married couple who wants life insurance benefits to pay estate taxes when the second spouse dies should purchase what policy?
Answer: C
Survivorship policy
A survivorship policy is designed specifically for couples, where the death benefit is paid out only after both spouses have passed away. This type of policy can be an effective way to ensure that estate taxes are covered when the second spouse dies.
A) Family policy.
A family policy typically covers multiple family members but does not specifically address the timing of payouts related to estate taxes after both spouses have died. Therefore, it is not the best choice for ensuring that estate taxes are paid upon the death of the second spouse.
B) Joint life policy.
A joint life policy pays out upon the death of the first insured individual, which means it would not be suitable for a couple looking to cover estate taxes upon the death of the second spouse. This policy's structure does not align with the couple's financial goals in this scenario.
C) Survivorship policy.
The survivorship policy is specifically tailored for situations where benefits are needed after both spouses have died, making it ideal for covering estate taxes. This policy provides a death benefit only after the second spouse passes away, thus directly addressing the couple's needs for estate tax payments.
D) Universal life policy.
A universal life policy is a type of permanent life insurance that offers flexible premiums and death benefits but does not specifically cater to the needs of a couple looking to manage estate taxes after the death of both spouses. It may not provide the same benefits as a survivorship policy in this context.
Conclusion
The survivorship policy is the most suitable option for a married couple who wants to ensure that life insurance benefits are available to cover estate taxes when the second spouse dies. Other options, such as the family policy, joint life policy, and universal life policy, do not meet the specific requirement of providing a death benefit after both spouses have passed, making them inadequate for the couple's financial planning needs.