Making decisions about a life insurance claim can be challenging. This type of policy provides a person with funds after the policyholder dies. The funds aim to help the beneficiary to continue to live the lifestyle he or she desires. Yet, there are a few decisions to make. One of them is about how you willimage of life insurance sign on top of money receive the funds. The answer to this question is – it depends. What can you do to reach a satisfactory conclusion?

You Have Payout Options

When a life insurance benefit pays out, this means the policyholder died. It also means the beneficiary will need to make a decision about how to receive the funds. The most common method is through a lump sum. This means the beneficiary receives all the proceeds from the policy at one time. This can occur quickly. The individual may receive those funds within a matter of weeks after filing a claim.

However, some policies will pay a death benefit in other methods. This is a newer type of policy option available for some people. Here is a closer look.

Lump Sum Payment

In this case, the person receives a single payment for the total death benefit. This allows the beneficiary to immediately use all of his or her funds for any need. The funds disburse to the individual with the freedom to use them as desired.

Income Stream Payment

Another option is an income stream payment. Sometimes, this can be a better option. If the beneficiary is younger, usually under the age of 40, receiving an income stream can prove to be ideal. The beneficiary receives a fixed amount of money over his or her lifetime. A monthly payment comes to them from the life insurance company on a routine basis. The user can still use the funds for any need.

There are other options available. An interest only or earned interest option is one. It allows individuals to receive payments of just the interest over a period of time. This allows for the user to maintain the larger sum for growth in an investment.

The key to making this decision is to understand your needs. Those who have bills to pay and debts they wish to overcome, a lump sum offers more freedom. However, interest can grow on the funds from a life insurance policy if the policy remains in place long term. This can prove to be lucrative in those instances.

Also Read: Understanding Your Life Insurance Options

Share |

No Comments

Post a Comment
Required (Not Displayed)

All comments are moderated and stripped of HTML.
Submission Validation
Change the CAPTCHA codeSpeak the CAPTCHA code
Enter the Validation Code from above.
NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015

View Mobile Version