Life Insurance

Understanding Life Insurance Settlement Options

Many purchase life insurance to protect their spouse and children. If unfortunately, the insured passes away, the death benefit can be used to cover family living expenses, mortgage payments, and children’s tuition. Besides allowing policyholders to determine the sum assured, some insurers even provide "Death Settlement Options" that give policyholders the flexibility to arrange how their beneficiaries will receive the death benefit.

Author Bowtie Team

Date 2021-11-15

Updated on 2021-11-15

What are death settlement options?What death settlement options are typically offered by life insurance?

What are death settlement options?
What death settlement options are typically offered by life insurance?

What are death settlement options?

A death benefit option refers to how the insured would like their policy’s beneficiary to receive the death benefit after their death.

What death settlement options are typically offered by life insurance?

In addition to the lump-sum settlement option, the death benefit of a life insurance policy can also be paid in equal amounts every month to the beneficiary. The details are as follows:

	Examples of Death Settlement
Installment Payments (Fixed Amount)	Following the death of the insured, the death benefit will be paid to the beneficiary in equal amounts every month until the entire amount of the proceeds has been paid.
Installment Payments (Fixed Period)	Following the death of the insured, the beneficiary will receive the death benefit as an annuity over a fixed period of 10 years.