Life Insurance Death Benefit: What It Is And How It Works

By Kyle Fitzsimmons, InsuranceAgents.com Staff Writer

The Basics Of A Life Insurance Death Benefit

Taking out a life insurance policy is an important step in everyone’s life. Gettig the lowest life insurance rates, while ensuring you hav the best coverage is the next step. Whether you’re a man or a woman, purchasing life insurance is a very difficult yet crucial step, in coming to terms with your mortality and considering the bigger picture: the welfare of your family after you’ve passed. However, before purchasing you should familiarize yourself with all aspects of a life insurance contract including the all important death benefit.  The best way to get a good detaild description, is to talk directly to a life insurance agent.  You can find one in your area quickly, using our 1 step form.  Find out who you can trust in your area.

So you know you need life insurance, but can you afford it?  Use our quick form to compare life insurance rates onlne and compare offerngs before choosing the most attractive option, thats it!

The death benefit is more than likely your next of kin but can also be a charity or small business.

Once you pass on your death benefit is awarded to your beneficiary in one of two ways:

• One lump sum in the amount of the life insurance policy
• A series of periodic payments in the form of either a fixed or variable annuity

The fixed annuity is exactly what it sounds like. The amount of a variable annuity differs from payment to payment because of interest as well as other factors.

Other important points of a life insurance death benefit include:

• Remember that the first obligation of a life insurance policy is to ease the burden of your debts and financial requirements that your family must face upon your passing
• If you so choose and have the means to do so you can include extra benefits to continue or improve your family’s lifestyle
• The death benefit listed in your life insurance is non-taxable however the interest you accrue with the policy is taxable

Think Ahead With A Life Insurance Policy

The death benefit is arguably the most important aspect of a life insurance policy. It is the reason you purchased the policy to begin with: to take care of your family after you’ve passed on so they don’t have to add your financial obligations to their already intense grief. Talk to a life insurance agent today about writing your policy and naming your death benefit or use our form to compare life policies.

Published: Monday 2nd November 2009