Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Two business partners are insured under one policy that pays the face amount upon the death of the first of them to die. This policy is a:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
A joint life policy covers two or more lives and pays the face amount when the first insured dies; coverage then terminates. It is commonly used to fund a buy-sell agreement so the surviving partner can use the proceeds to purchase the deceased partner's business interest. A survivorship, or last-to-die, policy pays only when the final insured dies and is typically used for estate-planning and second-to-die needs. The first-to-die trigger and the payment of a single face amount distinguish the joint life contract from other multiple-life arrangements.
Why the other options are wrong
- A) Survivorship (last-to-die) pays only when the last insured dies, which is the opposite trigger from the policy described in the question.
- B) Key person insurance is a single-life policy owned by a business on the life of a vital employee, not one policy covering two lives and paying at first death.
- D) A family income policy pays monthly income to survivors for a stated period, not a single lump sum at the first death among two business partners.
Memory hook
Joint life = pay at the first funeral. Survivorship = pay at the second funeral.