What type of life insurance covers two individuals and pays upon the death of the last insured?

A survivorship policy, also known as a second-to-die policy, specifically addresses the need for coverage on two individuals and pays out upon the death of the last insured. This type of insurance is often used in estate planning and can help heirs cover estate taxes or other financial responsibilities once both insured individuals have passed away.

Survivorship policies are beneficial for couples or business partners who want to ensure that, despite their absence, their beneficiaries have the necessary funds to manage their estate or business obligations. The lower premiums compared to individual policies for each individual also make this an appealing choice for many.

In contrast, a joint life policy covers two individuals but typically pays out upon the death of the first insured, which is a different purpose altogether. Term life policies provide coverage for a specified period, while whole life policies offer perpetual coverage along with a cash value component but do not specifically cater to the situation of covering two individuals with a focus on the last to die. Therefore, the uniqueness and intended purpose of a survivorship policy make it the correct answer.