What type of life insurance policy pays a benefit when the last insured dies?

The type of life insurance policy that pays a benefit when the last insured dies is a Joint Survivorship Life (Last to Die) policy. This policy is specifically designed to cover two or more individuals, typically spouses, and provides a death benefit to the beneficiaries only after the death of the last insured person. It is commonly used for estate planning purposes, allowing the death benefit to help with estate taxes or to provide an inheritance for heirs after both insured individuals have passed away.

Term life insurance provides coverage for a specific period and only pays a death benefit if the insured dies within that term, which does not suit the criteria of paying upon the death of the last insured. Universal life insurance and whole life insurance policies, while they can provide permanent coverage for an individual, do not specifically address the scenario of both insured individuals passing away before the benefit is paid out. Instead, these types of policies typically pay a death benefit upon the death of the individual insured, rather than waiting for the last insured in a joint scenario to die.