Most beneficiaries will be surprised to learn that they now have a number of options for how the life insurance benefit is paid. Traditionally, when a death occurs and a there is a payout under a policy, it's done as a life insurance lump sum payment. Over time, both consumers and financial advisors have expressed concern about this method of payout as not necessarily being in the best interests of the beneficiary. In recent years, there have been changes made to life insurance policies that now give payout options.
Before we look at the types of payout options let’s start with the basics of making a claim and when the beneficiary can expect to receive the money: