Second-to-die (also survivorship) life insurance pays only at the death of the second insured. It is the canonical estate-tax-funding instrument for couples with estates large enough to face the federal estate tax: the marital deduction defers tax until the surviving spouse dies; the death benefit on the second-to-die policy arrives at the same moment as the tax bill. Premiums are substantially lower than two separate single-life policies because the insurer is pricing the longer joint life expectancy.
The standard structure: an ILIT owns the policy, the ILIT is funded annually via Crummey gifts up to the annual gift-tax exclusion ( per donee per donor in 2026), and the death benefit pays into the trust outside the taxable estate. section “Life Insurance Workaround” covers the ownership and gifting mechanics; the relevant call here is whether the estate-tax exposure justifies the premium load — which it usually does only for estates well above the combined exemption (currently million per spouse, million per couple under the 2026 OBBBA-restored level), and which becomes critical for any closely-held business or illiquid concentrated holding that the heirs would otherwise have to fire-sell to pay the tax.