Death Benefit 101 | Life Insurance Explained

Fred recently purchased life insurance. He explained to his wife what the death benefit is and how the payout structure works. More importantly, he also explained the payout requirements. Stick around till the end of the video so you can know more about death benefits and payout requirements.

Let’s talk about the death benefit. It is an amount of money that is paid out to the beneficiary of a life insurance policy. This is in exchange for paying out premiums for the life insurance company. The beneficiary can be a person or several people the policyholder cares about and requests to receive the death benefit after passing away. This money is typically not considered as a taxable income. Nonetheless, in certain situations, estate tax may be applicable. You can check out our other video on avoiding taxes in life insurance. While I have your attention, please hit that subscribe button and bell button to join our notification squad.
The death benefit can be paid as a lump sum. In other words, the beneficiaries can receive it through a one-off payment. The policyholder can also choose other payment structures for the death benefit.
For instance, the death benefit may be split in half. One-half can be transferred to the beneficiaries after the policyholder passes away.
The other half can be transferred after a specified amount of time.
The death benefit can also be paid over a set of monthly or yearly installments based on the policyholder’s preference. Even if simple, the beneficiaries need to know few things before claiming the death benefit.
They need to know about the life insurance company that provided the life insurance policy of the deceased policyholder. Unfortunately, there is no unified database or a central location that the beneficiary can search for the policy. That’s why the policyholder must share this information with the beneficiary once the policy is purchased. After knowing the insurance company, the beneficiaries would have to fill in a claim form. This claim form would typically allow the beneficiaries to indicate their preference for the payment structure and method of the death benefit. The beneficiary would also attach the death certificate of the deceased policyholder alongside this form. These steps should be followed by every person mentioned in the beneficiary list to receive the death benefit. So you can see how simple these steps are. The essential part is that the beneficiaries are well aware of the life insurance provider. Otherwise, the death benefit may remain unclaimed. If you liked this video, make sure you demolish that Subscribe button and join our notification squad by hitting that bell button.

------- Contents of This Video -------

00:00 - INTRODUCTION
0:28 - DEATH BENEFIT
0:36 - BENEFICIARIES
0:42 - ESTATE TAX
1:01 - PAYMENT STRUCTURE
1:40 - INSURANCE PROVIDER

Useful Resources:
https://www.prudential.com/
https://www.statefarm.com/
https://www.newyorklife.com/
https://www.northwesternmutual.com/
https://www.transamerica.com/individual/
https://www.mutualofomaha.com/
https://www.usaa.com/?akredirect=true

Видео Death Benefit 101 | Life Insurance Explained канала Lecture Pal