Life Insurance Settlement
By Donald Lusan
If you think about it, your life insurance settlement option used is vital when it comes to what you really want your policies to do. Most life insurance agents don't discuss this in detail. The online life insurance salesmen are even worse. Special consideration has to be given as to whether or not this policy is intended for family protection. Is this policy intended to provide an income, or is the need a lump sum need. Is the need for a retirement income whether through an annuity or a permanent life insurance policy. Is the policy intended to pay estate taxes.
What of business life insurance, is this policy intended to fund a "buy sell" agreement or is it for key person insurance.
Regardless of the purpose, the life insurance settlement option you decide on is an important decision and is worth your thought and consideration.
Here are the options you have.
You can have the proceeds paid out in one Lump Sum. This is an advantage if the need is a lump sum need, like last expenses etc. This can be wrong option if the intent is to secure the family until the children finish school. It is better to use an income option to fulfill this need.
The proceeds of the life insurance policy can be paid in the form of a Life Income. Let us take a situation where your desire is is to have sufficient income paid to your spouse for the rest of her life, the Life Income Option is ideal. Incidentally, there are several Life Income Options.
When setting up your pension you can arrange with the insurance company to pay out the income until the last person named dies. This is referred to as the Joint And Last Survivor Settlement Option. Usually used for married couples.
Another life insurance settlement option is the Interest Income Option. You say to the insurance company, pay me the interest each month and keep my principal intact. I like this option especially when the principal is sufficient to provide a decent monthly income.
Another option is the Fixed Period Income Option. You say to the life insurance company, pay me whatever income the lump sum will provide over the next seven years, for example. The insurance company will do exactly that. Let us say you have a youngster about to enter medical school, you want to use this income to guarantee that the funds are available to take care of these costs, this would be a good life insurance settlement option to use for this.
The Fixed Amount Option is similar to the fixed period option as far as the end result is concerned. In this case, however, you decide on the amount of income you desire each month.
My method is to take the utmost trouble to find the right thing to say, and then to say it with the utmost levity. George Bernard Shaw, (1856 - 1950)