subject: Smooth Ways To Claim The Proceeds Of A Policy [print this page] You can get both living and death benefits from your policy. However, the benefits that you can get from a life insurance plan will depend mainly on the kind of policy that you will acquire. Normally, consumers obtain death benefits every time they get a life insurance policy. Nevertheless, permanent life insurance offers benefits you can take pleasure in while you are still alive and active. It is important that you know the repercussions availing those benefits.
Types
On the whole, there are two types of policies readily available. The first one is called term life insurance. This variety of policy provides insurance benefits in exchange for a premium. The other one is called permanent life insurance. This sort of policy gives death benefits in return for a premium you have paid, which is somewhat comparable to term insurance. However, permanent life plans offer a cash value savings besides death benefit.
Procedure
The groundwork in claiming the proceeds of a policy includes contacting the insurance carrier and asking for the required forms. If you aim to collect death benefits, you will be asked to fill out a claim form and present the insurer with a copy of the policyholder's death certificate. If you are claiming benefits with permanent life insurance, you may acquire the opportunity to exploit the cash reserve in any way you want to spend it. If you want to get an access to your policy's cash value, you just have to contact the insurance carrier and apply for a policy loan or a withdrawal. How you can use your cash value relies on the features of the life insurance policy. Practically, almost all whole life policies only extend loans or limited withdrawal options. Conversely, universal life insurance offers withdrawals and loans.
Benefit
The main benefit of obtaining a policy is it gives an amount of money to your recipients upon your death. Your heirs can exploit this money to recompense the unpaid medical bills and funeral expenses and give your children a college funds if necessary. Besides, you can employ the cash value of a permanent policy to pay debts or augment your income after retirement.
Warning
Be mindful of your decisions when claiming the insurance benefits from your permanent policy. You must realize that cash values are tax-free when withdrawn from the policy. On the other hand, if the policy lapses, your life insurance cash reserves turn out to be taxable as income.
Other Concerns
There are different ways of collecting the proceeds of your policy. You may either go for lump sum distribution or monthly payments. You may choose lump sum payment if you have an urgent need for a large amount of money. Otherwise, you may prefer monthly pay outs if you want a fixed or supplementary income.
