What is the purpose of survivorship life insurance?

Survivorship life insurance is designed specifically to provide a death benefit that will be paid out after the second death of the insured individuals, typically a couple, such as spouses. This type of policy is often utilized in estate planning to help cover estate taxes or provide beneficiaries with an inheritance after both insured individuals have passed away. Since the policy’s payout is contingent on the death of the second insured, it generally results in lower premiums compared to individual policies. This can make it appealing for couples who seek to ensure their heirs or manage their estate's financial obligations efficiently after both have deceased.

The other options address related concepts but do not accurately reflect the core purpose of survivorship life insurance. For example, while insuring one life for a lower premium relates to individual policies, it does not capture the essence of survivorship. Covering variable investments pertains to different types of life insurance riders or policies that focus on investment components, which is not the primary goal of survivorship insurance. Lastly, insuring multiple lives under separate policies diverges from the fundamental structure of survivorship life insurance, which ensures that the benefit is paid out after the passing of two individuals, not treated as separate entities under distinct contracts.