When is Money Paid On a Life Insurance ?

With all the different types of insurance policies it can be difficult to your beneficiaries to determine how your insurance will pay out. Beneficiaries are designated by the policy owner to receive the benefits upon their death. Policies can be paid out in either a lump sum or an annual payment.


The standard payout is in a lump sum to the beneficiary after the death of the insured. Annuities may also be set up to make payments either over time or in a lump sum to the policy owner. Payout methods are determined at the time of purchase and are defendant upon the policy type. Annuities are chosen by some individuals as a way to invest for retirement. Policies are paid for either in full at time of purchase on in payments at the time the annuity matures the policy owner is paid back with interest.


Life insurance policies can be found in many forms that will suit your needs. Policy types include term life, universal life, variable life and whole life. Endowments are policies that payout to then insured with the policies term ends or matures or to the beneficiaries if the policyholder dies. If a trust has been set up the payout is deposited into the trust and the terms of the trust of the policy owners will determines how the proceeds of the policy is paid out to the beneficiary.


Variable or Universal life accumulate a cash value they the policy owner may borrow against without an affect of the death benefit. If the policyholder dies before repaying the loan the payout will be the cash value minus the outstanding loan balance. The death benefit will be paid out as long as the premiums have been paid and are up to date. These policies are flexible it the terms of premiums.


Term life insurance has a specified number of premiums, or term, along with a determined premium amount and a specified face value. When the end of the term has been reached the policy expires. The policyholder may be allowed to renew the policy for additional premiums. Term life policies do not have a cash value they only pay out on the event of the death of the insured.


Will divorce change how a Life Insurance Policy is paid out?
This question is usually addressed during divorce negotiations. Upon divorce there may be a need to change that owns the policy and who the beneficiary is there may also be an issue of how to divide any cash value of the policy. If a will sets up a trust fund for the beneficiary you will need to determine how the proceeds are paid out and make any necessary changes. If a policy has a cash value you will need to know the specifics when you are in divorce negotiations and may wish to provide for any dependents that may be the beneficiaries. You should consult with legal council if you are uncertain if your dependents will be cared for in the event of death.


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