How Does The 10 Year Life Insurance Policy Work?

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The guaranteed death benefit of the 10 year life insurance policy remains level for the entire 10 year duration and can be paid out as a lump sum or in income form. This policy is also called a 10 year term policy or a 10 year term life insurance policy. If you or your beneficiary should choose have the policy proceeds of your 10 year life insurance policy paid out in the form of an income there are many choices. The income can be paid on a monthly basis, a quarterly basis, every 6 months or once per year. The decision as to frequency of payments usually depends on the reason you choose to take the proceeds in income form and the size of the policy.

• As mentioned above you can choose to have the proceeds of the policy paid in one lump sum. If your beneficiary is a person who is accustomed to handling large sums of money then this may be a good way to have him or her receive payment. Some people are very frugal and capable when handling money while others are the extreme opposite. The policy proceeds would disappear in a very short period of time and...there would be nothing to show for it. Bear in mind that how you elect to have the proceeds paid can be very important as a determining factor as to whether or not your intended desires come to fruition.

• Another choice of payment of the proceeds of your 10 year life insurance policy is the life income option. Let us suppose you have a beneficiary who you want to financially support for the rest of that persons life. You have doubts as to whether or not that person will invest the lump sum in an efficient manner. This person may be someone who wastes money on trivialities. It may be wise to use one of the life income options.

  To give them the largest life income possible you would choose a life income with no certain period. This means that your beneficiary would receive payment at certain intervals for as long as he or she lives. The problem is that the income would terminate upon the death of that beneficiary regardless of whether or not an amount equivalent to the lump sum has been paid.

  Another way of paying proceeds in life income form is to have the insurance company pay the proceeds with a guaranteed certain period. What this means is that income derived from the proceeds of your 10 year life insurance policy would be paid to your beneficiary for life, however, there is a minimum guaranteed period. The income would be less than the choice mentioned above. You could choose a life income with 5 years certain, 10 years certain, 15 years certain or 20 years certain. The longer the guaranteed period, or certain period the lower the income.

  So if your beneficiary starts receiving the income and dies one year later a named contingent beneficiary will continue receiving the income. If that contingent dies a second contingent or further payee will receive the income for the balance of the guaranteed period.

• The proceeds at death of your 10 year life insurance policy can also be paid out using the fixed period option.. In lieu of a lump sum payment the death benefit would be paid out in equal amounts over a fixed number of years. With interest added to the portion of the principal held by the insurance company the total would be considerably more than the face value of the policy.

• You have the option also of telling the life insurance company to pay out a fixed amount of money at certain intervals to your beneficiary until the proceeds are exhausted.

• Upon your death you can elect to have the life insurance company hold on to the proceeds of the policy for a specific period of time but pay the interest earned to your beneficiary at predetermined intervals. At the end of that period of time the principal would be paid in one lump sum. This is known as the interest option.

Your 10 year life insurance policy has a level premium for 10 years...there is no cash value. Basically, this is how a 10 year term life insurance policy works.

At extra cost you can have the waiver of premium rider added to your policy. You can also add the accidental death benefit rider.