Insurance companies pay billions of dollars annually to policyholders for claims, according to the Insurance Information Institute. If you have made an insurance claim, the company may present different payout options. Which should you choose? What should you do with that money?
• A lump sum payout gives you all the funds you are due in one payment.
• Advance payments give you some money for immediate needs, such as food, shelter, and clothing after a natural disaster.
• Partial payments may be provided if the company specifies certain conditions, such as repair work by a qualified contractor.
Life Insurance Death Benefits
If you are filing a death benefit claim under a life insurance policy as a beneficiary, there may be additional options.
• Life Income allows for guaranteed, fixed payments on a monthly basis for the rest of your life. Your age and gender determine how much, and payments will stop when you die.
• Life Income within Certain Period lets you receive a guaranteed portion of the death benefits while you are alive or for a certain time period, whichever is longer.
• Joint and Survivor Life Income gives a guaranteed income amount for you and your beneficiary or beneficiaries, which continue until the last beneficiary dies.
• Interest Income lets you choose for the insurance company to keep the money and pay you interest, with options for withdrawal.
• Specific Income allows you to choose payout options until the death benefit is completely paid.
Before selecting a payout option, think about your financial needs and whether you can satisfy conditions. We can help you think through what is best in terms of your other Estate Planning requirements. Contact Unsworth LaPlante, PLLC in Vermont for assistance.