Survivorship Clause

A survivorship clause, also known as a survival clause, is a provision in a life insurance policy or annuity contract that requires the beneficiary or annuitant to survive the insured or annuitant for a specific period of time in order to receive the death benefit or annuity payments. This period is typically short, such as 30 or 60 days.

Here’s how a survivorship clause works

• Death of Insured/Annuitant: When the insured person in a life insurance policy or the annuitant in an annuity contract dies, the survivorship clause comes into play.
• Beneficiary/Annuitant Survival: The beneficiary of the life insurance policy or the annuitant designated to receive payments must survive the insured or original annuitant for the specified period in the clause.
• Payment of Benefits: If the beneficiary or annuitant survives the required period, they receive the death benefit or annuity payments as outlined in the policy or contract.
• Alternative Beneficiary/Annuitant: If the beneficiary or annuitant does not survive the specified period, the death benefit or annuity payments may go to a contingent beneficiary or annuitant named in the policy or contract. If no contingent beneficiary is named, the benefits may go to the insured’s or annuitant’s estate.

Purpose of Survivorship Clauses

• Prevent Simultaneous Death Issues: Survivorship clauses help avoid complications that can arise in cases of simultaneous death or when the beneficiary dies shortly after the insured.
• Ensure Intended Beneficiary Receives Benefits: It helps ensure that the intended beneficiary receives the benefits, rather than the benefits going to the estate of a beneficiary who dies shortly after the insured.
• Simplify Administration: It can simplify the administration of the policy or contract by providing clear guidelines for the distribution of benefits.

Example

A life insurance policy has a survivorship clause that requires the beneficiary to survive the insured by 30 days. If the insured dies and the beneficiary also dies within 30 days, the death benefit would not go to the beneficiary’s estate but would instead go to a contingent beneficiary or the insured’s estate.

Global Perspective

Survivorship clauses are common in life insurance policies and annuity contracts worldwide. They provide clarity and help avoid complications in the distribution of benefits, especially in situations where the beneficiary or annuitant dies shortly after the insured or original annuitant.

Survivorship clauses are an important detail to consider when reviewing life insurance policies or annuity contracts. They provide a mechanism to ensure that benefits are distributed according to the policyholder’s wishes and avoid potential complications in the event of near-simultaneous deaths.