Which statement best describes the underwriting focus of second-to-die policies used in estate planning?

Which statement best describes the underwriting focus of second-to-die policies used in estate planning?

• A. It focuses on the older, less healthy spouse.
• B. It generally has lower underwriting risk because it focuses on the younger, healthier spouse.
• C. It requires both spouses to be identical in health.
• D. It avoids any underwriting considerations.

Answer: (B)

Second-to-die policies pay out only after both spouses have died, so the insurer’s risk is tied to the joint longevity of the couple. Because the payout depends on the second death, the underwriting weight is placed on how long the healthier, younger spouse is expected to live. That healthier partner drives the projected joint life expectancy, which generally allows for lower underwriting risk and smaller premiums than what you’d see with a policy on an older, less healthy individual. The older spouse’s health matters, but it has less impact on the timing of the payout compared to the healthier spouse’s life expectancy.

Second-to-die policies pay out only after both spouses have died, so the insurer’s risk is tied to the joint longevity of the couple. Because the payout depends on the second death, the underwriting weight is placed on how long the healthier, younger spouse is expected to live. That healthier partner drives the projected joint life expectancy, which generally allows for lower underwriting risk and smaller premiums than what you’d see with a policy on an older, less healthy individual. The older spouse’s health matters, but it has less impact on the timing of the payout compared to the healthier spouse’s life expectancy.