Jan 19
Do I have to take the proceeds of a life insurance death benefit in a lump sum?
If someone dies and you are the beneficiary of his or her life insurance policy, you can usually accept the proceeds in one of three ways:
- As a lump sum – receiving all the money at once
- In fixed payments over a specified period of time
- By establishing an annuity that makes regular payments to you for the rest of your life.
If you don’t need all the money right away or don’t want to worry about investing it, you may instead be able to take the benefits in fixed payments for a specified number of years, such as 10 or 20, or you may want to annuitize the payments to guarantee monthly or annual payments for the rest of your life. Those alternatives make sense if you want the security of a steady income.
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