Life insurance settlement options refer to the manner in which your loved ones will be paid your death benefits in the event of your death. Normally, most people would prefer to receive the death benefits at once from their life insurance company. On the other hand, some individuals prefer other settlement options which are given as follows:
Interest income option
This option allows your life insurance company to keep your proceeds in trust for a specific period of time. The interest earned on your death benefit is then paid to your dependents monthly, quarterly, semi-annually or annually. In addition, your beneficiaries are free to withdraw part or all the death benefit anytime they want.
Joint and survivor life income annuity option
With this option, your family can convert your death benefits into a series of periodic payments based on the lives of two or more people. In other words, the amount received by your loved ones will depend on their overall life expectancy and the amount in your death benefit. Therefore, this option ensures that your life insurance proceed is from one of your dependent to another until the last survivor dies.
Life income option
If this option is selected, your dependent will receive an income for the rest of his or her life. However, the amount of income will depend on the size of your death benefit, your the age and gender of the beneficiary.
Specific income option
This option allows your family to receive an equal amount of income every year for a definite period of years. This payment would continue until your death benefit has been exhausted. However, if one of your beneficiary dies before the proceeds is fully paid, another family member can be selected to receive the remaining payments.
Fixed amount option
With fixed amount option, your life insurance death benefit is paid to your beneficiaries at regular intervals until the entire amount is exhausted. This option also allows your beneficiary to increase, decrease or even change to another settlement option entirely.
Fixed period option
Fixed period option pays your beneficiary both the interest and the principal over a definite period of time. However, if this person dies before the entire death benefit is paid, the remaining money will then be paid to another dependent that was named in your life insurance plan.