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  • What Are Life Insurance Survivor Options
  • June 5, 2017
  • insurance survivor options
    On fewer and fewer new policies and almost all older ones, the insurer offers a variety of survivor options when the insured passes away.

    The following is a list of the more common settlement options:

    Lump Sum Payment

    This is a one-time payment for the total or partial value of the insurance policy.

    Income for a Fixed Period from five to 25 years

    If you should die before the payments are complete, your beneficiary will get the remainder in the same time intervals.

    Life Income with a Guaranteed Payment

    You collect a payment for the rest of your life at least equal to a guaranteed amount, which is calculated by the insurance company. If you should die before the guaranteed amount is paid, your beneficiary will receive the difference at your death.

    Joint and Survivor Life Income

    Payments are made for your life and the life of your selected survivor. Your survivor does not have to get the same amount – it may be selected at 33 percent, 66 percent, and 100 percent.

    Lifetime Income

    This provides income for only your life. When you die, payments cease altogether.

    Installment Refund with Life Income

    You will receive income for life. Should you die before you have received total payments equal to your initial contribution, your beneficiary will receive the difference.

    Income of a Specific Amount

    You can select an amount to be paid until the principal is exhausted.

    The decision of which option to take can be complicated. Keep in mind that the rate of return on the various options (expect the lump-sum) is fairly low – so you may not be maximizing the rate of return.

    Another consideration is that, except for the lump-sum option, access to the funds will be lost.

    Currently, most carriers, upon presentation of a death certificate, deposit the proceeds into a money market account and send the beneficiary a checkbook. The checkbook can then be used to write checks up to the total amount of the death benefit, plus any interest.

    If you seek additional information about survivor options, email me at
    By Tony Steuer, CLU, LA

    Steuer, author of Questions and Answers on Life Insurance: The Life Insurance Toolbook, has more than 25 years of experience and holds the Department of Insurance Analyst License (LA) as well as the Charted Life Underwriter (CLU) designation. Tony holds various leadership positions and has authored three books on the topic of life insurance.

    Steuer’s work has been awarded the “Excellence in Financial Literacy (EIFLE) Award from the Institute of Financial Literacy for his The Questions and Answers on Disability Insurance Workbook and The Questions and Answers on Insurance Planner. Forbes named Questions and Answers on Life Insurance: The Life Insurance Toolbook as one of their top nine great investment books.

    He’s also the founder of the Insurance Literacy Institute and creator of The Insurance Bill of Rights designed to empower consumers and to identify members of the Insurance Industry dedicated to strong professional standards.

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  • Category: Articles Library, Featured Articles, Life Insurance, Life Insurance; Tony Steuer Columns, Tips

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