For the past 200 years, life insurance companies have only offered a lump-sum payout of policy proceeds to beneficiaries. For many, this is not ideal considering these income tax proceeds are squandered in less than 5 years. Ask any life insurance buyer if they intend for the proceeds to be spent in less than 5 years.
Life insurance buyers want choices. In fact, a high percentage of life insurance owners do not want a lump-sum payout. Instead, they want a policy that gives them the option to create a customized and guaranteed income stream for their beneficiaries that cannot be mismanaged. The Installment Option instructs the insurance company to make guaranteed, pre-determined income payments over time. These payments are selected when the policy is issued by the policy owner. The best life insurance policies today give policy owners flexibility and options; the more, the better.
The Installment Payout Option allows policy owners to create a customized schedule to fit their family needs and guarantee a protected income stream for their beneficiaries, up to 10, 20 or even 30 years.
Premiums payments – up to 50% less for guaranteed results or the
total benefit is increased as much as 50% for the same premium.
The annual payments are pre-determined and guaranteed,
regardless of economic conditions or other variables.
Ability to customize the death benefit payments to meet individual
Proceeds are paid according to a pre-determined schedule, selected by the policy owner at the time of purchase. In the past, a lump-sum payment was the only option available. The Installment Option eases concerns about lump-sum payments being mismanaged.
What is the Installment Life Payout Option?
Rather than your beneficiary receiving a lump-sum payment at the time of
death, the Installment Payout Option gives you the power and control to choose guaranteed, pre-determined installment payments when the policy is purchased.
Is the Installment Option Less Expensive ? Can I Buy More Life Insurance With the Same Premium Payments?
Yes, this option is less expensive. The longer the deferral period, the lower the premium payments will be. Premiums can be as much as 40% less on an annual basis.
Is the Installment Option Better Than a Lump-Sum Option?
Neither option is “better” than the other. An increasing number of life
insurance buyers are concerned about the risks of leaving a lump-sum death benefit to their beneficiaries. For them, the Installment Option may be best. Life insurance owned for estate tax planning is a good example of when a lump-sum option may be a more appropriate alternative.
How is the Deferral Schedule Determined?
We encourage every life insurance buyer to meet with a life insurance professional to consider these options, and others. Your income, debt levels,
other assets, fixed and variable expenses, education, retirement assets and inflation are some of the elements in the calculation.
Can I Change the Payout Option from Installment to Lump-Sum?
Some insurance companies allow for this. Unlike the lump-sum option that is very limited from a planning perspective, the Installment Payout Option allows for customization by each policyholder.
Can I choose a Blend of Lump-Sum and the Installment Option?
Yes. Most people appreciate the ability to customize their life insurance
policy by combining a lump-sum payment with installment payments over time.
Can I Upgrade My Existing Insurance to the Installment Option?
Yes. By doing so, you may be able to lower the premium payments or
increase the death benefit for the same premium you pay now.
Can a Beneficiary Make Changes to the Installment Schedule?
No. However, the installment payments are an asset that can be sold at a
discount. We recommend a trust be considered as the policy owner, with an
informed trustee to ensure the insured’s intent is honored.
What if My Health Has Changed Since Last Purchasing Life Insurance?
If you have had a material change in health, be cautious about giving up
any existing coverage without a careful analysis. Consult with us to help evaluate your options. By choosing the Installment Payout Option, you may be able to neutralize the impact of a higher premiums.
What Insurance Companies Underwrite the Installment Payout Option?
The Installment Option is available from several of the most highly rated life insurance companies in the United States.
Please call me at 561-869-4500 or email me, Ted Bernstein, about a complimentary review of your existing policies.