What Life Insurance Pays Out Right Away?

You need to know what life insurance pays out right away. It will help your family get immediate help. Your sudden absence will not squeeze your family’s finances. Life insurance policies offer different payout options. You may get paid in instalments or receive a lump sum amount.

Types of insurance payouts

The beneficiary can choose the payout option of his convenience. Below are the available life insurance payout options:

Instalments and annuities

Under this payout option, the beneficiary receives the death benefits in instalments. The period of instalments can range anywhere between 5 and 40 years. The interest accrues on the unpaid amount. This way, it becomes a consistent source of income for the beneficiary.

An annuity is a financial instrument that produces a fixed income for a specific period. The beneficiary may choose to receive a lump-sum amount and buy an annuity. Some annuities offer the option to expand the payout over a lifetime.

Lump-sum payment

Generally, beneficiaries receive the death benefits in a lump-sum amount. People prefer it over receiving money in instalments. They can invest this amount in setting up a small business. This money also proves helpful in meeting day-to-day living expenses. It does not make them cash-strap if you were the family’s sole breadwinner.

Retained asset account

It is a checking account established by the company. It contains the amount owed to the beneficiary. The beneficiary writes a cheque to the company when it needs money. The interest accrues on the unpaid amount.

There are no limitations on the amount of withdrawal from this account.

 

Life Insurance Estimator 

 

 

What results in delayed life insurance payout?

Your life insurance payout can delay for any of the following reasons:

Fraud

If the insurance company suspects fraud, it initiates an inquiry. If the findings prove the fraud, the company can withhold the benefits.

Contestability clause

If the policyholder dies within the first two years of the enrollment, the company may contest the award of death benefits. The beneficiary may not receive any help in such a case if the policyholder dies from a cause concealed from the insurance company.

Murder investigations

If the policyholder gets murdered, the insurance company can hold the payout. It will wait until the beneficiary clears himself of any involvement in the incident. 

Conclusion

Most life insurance pays out right away. The beneficiary needs to file the claim immediately after the policyholder’s death. The beneficiary receives the death benefits within 30 days of filing the claim

The insurance company will not award you any benefits without filing the claim. Below are the documents you need for this process:

  • Death certificate of the insured
  • Copy of the life insurance policy
  • Insurer’s claim form

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