Question 61

Survivorship life insurance is used to provide payment on the last death.

Survivorship life insurance pays out a death benefit only after the second insured individual passes away, making it a strategic tool for estate planning and providing for beneficiaries after both parties have died.

A) payment on the first death

This option is incorrect because survivorship life insurance does not provide a payout upon the first death of one of the insured individuals. Instead, it is designed specifically to disburse the benefit only after the death of the second insured.

B) payment on the last death

This option is correct as survivorship life insurance is structured to provide a benefit upon the death of the last surviving insured. This characteristic is what distinguishes it from traditional life insurance policies.

C) cash value in a 401(k) plan

This option is incorrect because survivorship life insurance is not related to 401(k) plans or their cash value. 401(k) plans are retirement savings accounts, whereas survivorship insurance deals with death benefits.

D) retirement income

This option is also incorrect because survivorship life insurance does not offer retirement income. It is intended to provide a death benefit rather than serve as a source of income during retirement.

Conclusion

Survivorship life insurance is distinctly designed to provide a payout upon the death of the last insured individual, thus making option B the only accurate choice. Other options either misinterpret the functionality of survivorship policies or relate to unrelated financial instruments.