When does survivorship life insurance pay out?

Survivorship life insurance is designed to provide a death benefit that is paid out only after both insured individuals have passed away. This type of insurance is typically used by couples, often in estate planning, to ensure that heirs receive a payout after both partners are gone. The correct answer highlights that the policy pays out when the surviving insured dies, meaning the benefit is contingent upon both insured individuals' deaths rather than at the death of the first insured, which is characteristic of individual life insurance policies. This funding structure can also help in covering estate taxes or provide financial support to heirs, making it a strategic choice for certain financial planning scenarios.