Life insurance policies can provide financial support for your loved ones in the event of your death.
Many policies are designed to pay the beneficiary a lump sum as soon as the necessary investigation and paperwork has been completed following the death of the policyholder. While this payout structure might work for some people, you may find that a different insurance settlement option might be better suited to meet the needs of your loved one. Consider these two vital pieces of information before selecting a settlement option for your life insurance policy.
1. The age of the beneficiary.
The age of the beneficiary you have named on your life insurance policy can influence which type of life insurance settlements make sense. Many people name their children as beneficiaries. If your children are still minors, you may not want them to have access to a lump sum of money while they are still young.
You can work with your insurance agent to take advantage of the interest option for your settlement. The interest option allows the insurance company to hold the proceeds of your life insurance policy in reserve while making regular interest payments to the beneficiary. The full amount of the policy can be requested by the beneficiary at a future date.
The interest option lets your children receive regular funding without making them responsible for managing a lump sum until they have reached adulthood.
2. The amount of debt you have.
Another factor that you should take into consideration when selecting a life insurance settlement option is the amount of debt you have. If you have a large mortgage or significant credit card debt, it can be helpful for your beneficiary to receive a lump sum following your death. This large influx of cash can be used to resolve a lot of debt with ease.
If you have paid off your home and don't have any vehicle, student loan, or credit card debt, then it might be more financially feasible to provide your beneficiary with ongoing payments. The fixed amount option allows for your beneficiary to receive fixed payments each month until the balance of your policy has been exhausted.
Beneficiaries are less likely to waste their settlement with the fixed payment option, and you can rest assured knowing your loved ones will be financially provided for well into the future. Talk to your insurance agent to discover the payment amount and the estimated payoff length associated with a fixed amount life insurance settlement.
After months of trying to figure out how to protect my family's assets, I realized that one of the biggest liabilities we had was me. I knew that if anything happened to me, my wife and kids would have a tough time recovering financially, so we began working hard to track down an appropriate life insurance policy. It was really interesting to me to see just how much of a difference a little focus made, and before I knew it, I was completely signed up for a great policy that I knew I could count on. This website is all about protecting your future.