Life insurance is important because it protects your loved ones in case of your unexpected death.
Few people like to consider this possibility, but like most forms of insurance, it’s better to have it and not need it than to need it and not have it. Life insurance can help save your loved ones from funeral expenses, another unexpected crisis, or help them keep the family home. Those listed as beneficiaries on your policy can file a claim, but there may be delays in payouts in certain circumstances.
There can be payout delays of six months to a year if the insured dies within two years of taking out the policy. The insurance company can also investigate a claim to ensure no fraud has been committed or to verify the policyholder provided accurate information on their application. Additionally, many policies have a suicide clause that denies payouts if the insured commits suicide within two years of the policy being issued. There may also be delays if the insured was a homicide victim, as the beneficiaries have to be eliminated as suspects.
It’s best to speak with your beneficiaries about the best way for them to receive your death benefit. Annuities are one option, and this allows the policyholder to set up a steady income stream for beneficiaries. With this option, proceeds from the policy, as well as the accumulated interest, are paid out over an agreed-upon amount of time. It’s important to note that all interest is subject to taxation, but this option may be best if the beneficiaries need time to find other sources of income.
Beneficiaries can also receive a lump-sum payment, which is the most common option. There are also some policies that offer “pre-death benefits,” such as the ability to draw against the value of the policy in case of chronic or terminal illnesses. It’s also possible to sell your policy if you find you no longer need it or that you can use the money in a better way.
If you don’t yet have life insurance, you’re one of many. In fact, over 40% of those in the U.S. lack life insurance. Luckily, you can start exploring your options right away…Read more>>