Term Life Insurance

Sunday, December 04, 2016
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Life Insurance 101

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Settlement options

 
The life insurance policy owner may designate a specific settlement option to be paid upon his or her death. If the policy owner does not choose a specific option, the beneficiary(s) will be given a number of choices. These usually include:
  • Lump Sum Payment: The death proceeds of a life insurance policy are paid to the beneficiary(s) in one lump sum payment.
  • Fixed Period Payments: The death proceeds of a life insurance policy are paid to the beneficiary(s) for a fixed period.
  • Life Income with Installments Certain: The death proceeds of a life insurance policy are paid to the beneficiary(s) in installment payments through a certain period. After the certain period, payments will continue to be made throughout the beneficiary's lifetime but the payment may vary from the payments during the certain period.
  • Interest Payments: The death proceeds of a life insurance policy remain with the insurance company and the company pays the beneficiary interest payments.
  • Fixed Installments: The death proceeds of a life insurance policy are paid to the beneficiary(s) in fixed installments until the proceeds and interest on the unpaid balance of the proceeds are exhausted.
  • Single Premium Annuity: The proceeds of a life insurance policy are used to purchase a single premium annuity from the insurance company.