Death benefits from a life insurance policy can be paid within a few days of the claim being filed. A life insurance payout is surely a much appreciated source of immediate cash for one’s survivors, according to McGill’s Life Insurance editor, Edward E. Graves.
Many do not want to think of what would happen to our family if suddenly we were gone and they were left without any income stream. Most American families don’t have much of a savings emergency fund in place. So the life insurance really becomes a necessity.
If the life insurance policy has been in-force for less than two years, keep in mind it is still in the contestable phase. A contestable phase of a life insurance policy is when the insurer has the ability and right to investigate the death claim and application to determine if there was any fraudulent information in the application or any suspicious manner of the death.
This can only be done by the insurer within the contestability period however. When the policy anniversary date reaches two years, a death payout is made without question with a valid death certificate.
During the grieving process, people may not be able to think clearly as our brain is still trying to grasp what has just happened. As a result of this, we tend to forget about the cost of everyday necessities – such as food, transportation and utilities – or paying bills.
Even though the loved one has passed away, mortgage payments and loans still need to be paid. Utilities need to get funded and school activities go on and cost money. A life insurance policy death payout will assume the income role of the deceased during this timeframe.
While everyday expenses are less likely to be forgotten, it is also important to remember other expenses the insured might have had – such as club memberships and magazine subscriptions. It is important to not only cancel these payments but to also pay off final payments for them.
Education costs are important to consider if children attend private schools or colleges. Some life insurance may not be enough to continue that education.
For example, after the death of one woman’s husband’s insurance policy, there was not enough money to continue private education. However, she was able to get her children through one year and then reduce her costs by enrolling her children in public education.
And, of course, there are final expenses to consider – such as burial, cremations as well as other costs that may include estate fees.
Obviously, financial and estate planning are essential when establishing the best policy with a qualified life insurance adviser that can help plan your settlement needs.
Want to learn more about life insurance? Read our article The Most Frequently Asked Life Insurance Questions.