What is a survivor benefit option in life insurance?

The survivor benefit option in life insurance refers to a provision that allows a beneficiary to receive payouts after the policyholder's death. This type of benefit is particularly valuable in ensuring that dependents or loved ones have financial support following the loss of the insured individual. It often comes into play in scenarios such as providing for children, a spouse, or other family members who may rely on the income or financial support from the policyholder.

This option enhances the overall value of a life insurance policy by addressing the financial security needs of the beneficiaries, catering to their immediate and long-term financial obligations. It establishes a safety net, ensuring that beneficiaries are not left in distress upon the policyholder's passing.

In contrast, other options such as increasing coverage or extending the coverage period do not directly involve beneficiary payouts upon the death of the policyholder. Similarly, features that provide periodic payments during the insured's lifetime focus more on cash flow management for the insured rather than on the needs of the beneficiaries after the policyholder's death.