Death Benefit
The face amount plus any applicable riders or accumulated value paid to the beneficiary at the insured's death, income-tax-free to the recipient.
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Practice This Concept
Under a joint life (first-to-die) insurance policy covering two people, when is the death benefit paid and what happens to the coverage afterward?
The benefit is paid on the first death, and coverage on the survivor generally terminates — A joint life policy insures two lives and pays the full face amount on the death of the first insured. The contract then typically terminates, because the risk the policy was designed to cover, the first death, has occurred. This first-to-die design is often used in business settings, for example to fund a buy-sell agreement where two owners need cash when the first partner dies.
National insurance concept
A beneficiary wants the death benefit paid out in installments that will continue for the rest of the beneficiary's lifetime, no matter how long the beneficiary lives. Which settlement option best fits this goal?
Life income option — The life income option pays the beneficiary a guaranteed income for life, with payments ending at death. It can be selected alone or with a guarantee period (for example, life with 10 years certain). The life income option provides longevity protection that no other settlement option offers, because the fixed amount and fixed period options exhaust the fund regardless of how long the beneficiary lives.
National insurance concept
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- State RegulationsAn accelerated death benefit (living needs) rider allows the insured to:
- Life InsuranceA no-lapse guarantee rider on a universal life policy provides that:
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