Question 5

Survivorship life policy

A survivorship life policy is a type of insurance that covers two individuals and pays out benefits only after both individuals have passed away. This policy is designed to provide financial security for heirs, typically in the context of estate planning.

A) Family policy.

A family policy typically covers multiple family members under a single policy but does not specifically stipulate that benefits are paid only upon the second death. Instead, it may provide benefits upon the death of the first insured individual, making this option incorrect in the context of the question.

B) Joint life policy.

A joint life policy insures two individuals and pays out upon the death of the first insured. This means benefits are not contingent upon the second death, which directly contradicts the requirement stated in the question. Therefore, this option is not correct.

C) Survivorship life policy.

This is the correct answer as a survivorship life policy explicitly pays benefits only upon the death of the second insured individual. It is specifically designed to provide a payout that occurs only after both parties have passed away, aligning perfectly with the question's criteria.

D) Limited payment whole life policy.

A limited payment whole life policy is structured to provide coverage for a specific period during which premiums are paid, after which the policy remains in force for life. It does not relate to the timing of benefits in terms of multiple deaths, thus making this option incorrect for the question asked.

Conclusion

The survivorship life policy is definitively the correct answer because it uniquely fulfills the requirement of terminating benefits upon the second death of the insured individuals. In contrast, the other options either provide benefits upon the first death or do not pertain to the specific conditions outlined in the question, thereby failing to meet the criteria established.