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Life Insurance Proceeds

How Life Insurance Proceeds Are Paid

Life insurance proceeds. Your spouse dies and you are aware that s/he had a sizable life insurance policy.

You welcome your new acquired wealth but you are not certain how to handle your life insurance proceeds.

For someone accustomed to handling large sums of money there is no problem but for the average person there is a disturbing uncertainty that doesn't seem to leave your mind.


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I have seen situations where the surviving spouse was so prepared that handling life insurance proceeds was like a walk in the park. On the other hand, I have also seen the good intentions of a loving spouse come to nothing because of the lack of a good plan.

  • Immediate Expenses

    Upon the death of any individual there are certain instant expenses that come into play. You have to consider burial costs, probate costs, attorneys fees etc. Some people have sufficient cash on hand to take care of these things.

    For those who do not you should prioritize the task of proving the death of your loved one. A death certificate will be of great help. If there is a newspaper clipping of the circumstances of the persons death you should also provide a copy of it to the life insurance company.

    You also need to prove that you are the person mentioned as primary beneficiary on the policy. A copy of your birth certificate as well as your marriage certificate will be of great help.

    You will find that reputable life insurance companies will work with you and try to get the money into your hands as quickly as possible. If you can get into contact with the agent you will find that s/he will be a great help in expediting things.
  • How To Take Proceeds

    You will need a lump sum to take care of the immediate costs arising from the death of your spouse but you should give serious thought to taking the bulk of the proceeds in the form of an income. 

    If you are uncertain how to do this it is recommended that you use the interest income option until you have a chance to really think about what you want to do. The life insurance company will pay you the interest in whatever manner you choose. Your principal will remain in tact.

    If the income of the deceased spouse was important to the standard in which you have become accustomed then it may be wise to take the proceeds in the form of a life income. You will never outlive it.

    If your need for income is a temporary one then you may choose to use a fixed period income or a fixed amount income for whatever period you desire. Let us suppose you are age 55 when your spouse dies. Let us also suppose that you have a sizable pension that you will receive at age 62.

    You would then need to take the income you require for 7 years in order to maintain your lifestyle. You take the balance of the life insurance policy proceeds in a lump sum at that time.

There are many other settlement options available. See this page for additional information.


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