Guiding You Through Life Insurance Settlement Options

By: Craig Thornburrow

Although it is a sad topic to think about, you still must consider what to do if a life insurance settlement options of death benefits has been offered to you. If someone has named you as beneficiary and then passed away there will be many things to consider. Depending on the person, if it is a spouse or parent, there are certain obligations that need to be taken care of first.

Once these are done contact with the insurance company will be made and the options available to you regarding the money will be discussed. There are several options open to the beneficiary and they should not allow themselves to be pushed into one that does not suit their circumstances.

Most indemnity policies are made to give the beneficiary the ability to choose how they would like to receive the money they are going to come into. Llife insurance settlement options can be made one of three ways. First it can be paid out all at once. This gives the beneficiary a lump sum of money that they can do with as they please. There will be only one payment after the death claim and that is all. All options e will have tax implications depending on how much was paid in premiums and how much the actual policy was for. Taxes will be paid on the difference.

Or it is possible to have the death benefits paid out in monthly payments until this amount is used up. This amount is usually based on what the amount owing is, how old the beneficiary is and what their life expectancy is likely to be. Then there is an equal monthly figure worked out. The problem with this scenario is that if the beneficiary dies, the money owing does not come to the beneficiary's beneficiary.

Another possibility in the way the money can be paid out is as interest income. This method has the insurance company keeping the money from the life insurance settlement and paying the beneficiary only the interest that is generated. This gives them a small but steady monthly income. At any time they can decide to take the lump sum out. They need only to let the insurance company know that that is what they want to do.

Remember that the insurance company is entitled to charge a fee to the beneficiary if there are things that they are required to do. Sometimes the company will give a small portion of the death benefits to the client if the person is in need of the money badly, for example to pay funeral expenses. This is because processing the life insurance settlement options can often take a considerable amount of time.

Life Insurance
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