As the beneficiary of a life insurance settlement, it's important to understand that there may be a variety of payout options available to you. Following are a few options to ask the insurance company about.
Receive Interest Payments
If you are not in need of all the life insurance money you're entitled to right away, consider choosing an interest payment plan. Instead of paying you a lump sum of money, the insurance company will pay you interest on the total amount of insurance money that is owed to you over time and until you're ready to cash the full amount of the policy out. You can choose to receive interest payments monthly, quarterly, or yearly throughout the duration of the interest payment plan.
Access Income for Life
Another payment option to consider is income for life. The total amount of the insurance policy payout will be split up into even yearly payments for a duration that is based on your age, health, and life expectancy. The idea is to make sure that you get a yearly income for the rest of your life. If you die before the entire amount of the insurance payout has been settled, the beneficiary you designate will continue receiving payments until the total insurance payout has been met.
Specify a Payment Term
If you don't need to negotiate a lifelong payment plan for the insurance policy you are a beneficiary of, there is the option of specifying your own payment terms. For instance if you want to receive an additional income for the next ten years to make raising the kids and sending them to college easier, the insurance company can split the total payout amount up and send you payments once a month or once a year for the next ten years.
Or maybe you want to be paid only a small percentage of the payout amount each month for the next few years until you retire, and then receive a lump sum for the balance after retirement. This customizeable payout option makes it easy to plan for the future, especially if you have a young family.
Get the Funds All at Once
And of course, you can always choose to receive the insurance money you're owed in one lump sum and then do with it as you see fit. You will have to fill out some paperwork and wait for your payment request to be approved, which could take a few weeks. But once you receive your payout, you'll be done working with the insurance company and you can move on with your life.