Full question:
What steps must I take to put in writing for my kids (Ages 13 and 19) to get monthly payouts after my death from my term life insurance policy?
- Category: Wills and Estates
- Date:
- State: Tennessee
Answer:
The steps to ensure your children receive monthly payouts from your term life insurance policy after your death depend on the policy's terms and your specific circumstances. You can usually designate a settlement option for the death benefit. Here are common options:
- Lump sum payment: The entire death benefit is paid at once to the beneficiaries.
- Fixed period payments: The benefit is paid in installments over a set period.
- Life income with installments certain: Payments are made for a certain period, then continue for the beneficiary's lifetime, potentially at varying amounts.
- Interest payments: The benefit stays with the insurer, which pays interest to the beneficiary.
- Fixed installments: The benefit is paid in regular installments until it is exhausted.
- Single premium annuity: The benefit is used to purchase an annuity that pays out over time.
Life insurance proceeds typically pass directly to beneficiaries outside of probate, as they are considered transfer-on-death assets. You can also place the policy in a trust, allowing a trustee to manage it and dictate how much each beneficiary receives. Some create trusts to minimize estate taxes for larger estates.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.