Which of the following best defines survivorship life policy?

A survivorship life policy is characterized by its design to provide a death benefit upon the passing of the second insured individual. This type of policy is typically purchased by couples or business partners, allowing them to secure funds that can be used to cover estate taxes or provide benefits to heirs after both parties have passed away.

The essential aspect of a survivorship life policy is that it does not pay out upon the death of the first insured, which distinguishes it from other types of life insurance. By waiting until both insured individuals have died, the policy accumulates a larger death benefit over time, which can be particularly advantageous for estate planning purposes.

In contrast, a policy that pays on the first death is designed to provide immediate benefits upon the death of the first insured. A policy covering a single individual addresses the needs of an individual policyholder without the complexity of joint coverage. Lastly, a policy paying benefits to the estate does not specifically reflect the intent of a survivorship policy, as it does not necessarily wait for both insured individuals to pass.

The focus of a survivorship life policy is to ensure that beneficiaries receive a benefit after both insured parties have died, thereby fulfilling its purpose as an estate planning tool.