Life Income Settlement Option at Life

Life Income Settlement Option. If the beneficiary chooses this settlement option, the insurance company will decide how much income the beneficiary will receive each year based on age and gender although the company may purchase an annuity instead. With other settlement options that pay out in installments over time, the original death benefit (principal) is not taxed, but any interest that accrues is taxed as income when it is paid to the beneficiary.

It pays the benefit while the beneficiary is alive; The insurer guarantees an annual annuity amount based on the beneficiary's expected lifespan and the death benefit amount. A settlement option starts annuity payments from annuities or life insurance to owners or beneficiaries.

It lets you convert the death benefit to fixed, regular annuity payments for the rest of your beneficiary's life. The life income option means the beneficiary will receive payments for his or her entire lifetime. Such a payout needs to be intimated to the insurer in advance by the insured. The insurer guarantees an annual annuity amount based on the beneficiary's expected lifespan and the death benefit amount.