Advertorial Death Benefits from Life Insurance policies

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There are many different kinds of life insurance policies but the one overriding feature is that they all contain death benefits.

 

Some policies are temporary, some last throughout a lifetime, some have cash value components while others do not but they all have death benefits.

 

When someone speaks of having a $200,000 policy what they really mean is that they have 200K in death benefit. 

 

So this blog will attempt to explain what this means. And outline some of the pitfalls and problems that can occur and head off difficulties down the line by dealing with a responsible provider. 

 

Death benefit is what it says on the tin - the money paid to beneficiaries if you happen to die while your policy is in effect.

 

Beneficiaries need to be clearly named, usually there is more than one, but they don't actually have to be people.

 

A charity trust or even a business can be named as the beneficiary.

 

While heirs are assumed, death beneficiaries are not necessarily heirs - they are designated.

 

With this in mind people who die intestate will have their worldly possessions distributed to their heirs but beneficiaries of life insurance policies are stated on the policy.

 

Often they are not direct heirs but left to people like grandchildren for their education or to those left behind as a help in running, say, a family business. 

 

The naming of a beneficiary may form part of a tax strategy to protect assets. Death benefits are usually tax free. 

 

In some jurisdictions you may need permission of someone like a spouse before you name beneficiaries. 

 

As many policies last a long time the beneficiaries can be changed though these must be clearly stipulated to avoid problems and legal challenges when you are departed.

 

Sometimes part of the payout can be paid out BEFORE death if an Accelerated Death Benefit rider is in place, an optional benefit. This means that people with terminal illnesses, for example, can use money due to them for health care should they need it. 

 

People entering into life insurance must be aware that policies can be decreased if there is malfeasance proved or if other things like outstanding loans were part of the policy.

 

Most reputable companies will pay in full, however.

 

When entering into a policy it is just as well to make it as easy as possible for those left behind to claim according to your wishes. 

 

Names may not be enough; you should include maiden names, social security or Thai ID numbers, dates of birth. Bear in mind that in such a policy things can and do change over time. 

 

You don't want your loved ones running into difficulty proving who they are after you have shuffled off your mortal coil.

 

If you are a beneficiary you shouldn't rely on the insurance company to inform you - it may be necessary for you to be proactive in making sure that you KNOW you have been named ahead of time. 

 

In some cases the insurance company may not even know about a death if they haven't been informed via a death certificate. 

 

It should be noted that payouts do not occur automatically with insurance companies having to be informed. Make sure that company names and policy numbers are kept in a safe place.

 

Things change over time and when requesting benefits it is just as well to have important details to hand so that A) there are not delays and B) legal challenges cannot spoil matters.

 

Payments do not necessarily have to be in a lump sum and can be made as an annuity or in instalments to suit various cases. 

 

Most death benefit rules in life insurance are similar from company to company but you should always ask your provider for nuances in policies and add-ons that can personalise your policy. 

 

A responsible provider will give you peace of mind when it comes to this important aspect of insurance. 

 

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