What if an Annuitant Passes Away Before Their Term Expires?
People who get permanent life insurance are taking care of two important issues at the same time: they’re ensuring the financial safety of their loved ones in the event that they will die suddenly; and they’re planning for their retirement. A permanent life insurance policy has what’s called a cash-value factor. This means that, unlike term life insurance, all the money you put into your permanent life insurance policy (in the form of your premiums) starts to accrue, and goes into a fund which you can get back when you want to.
Using Permanent Life Insurance as a Retirement Strategy
Many people use their life insurance policy as a retirement strategy seeing as it means guaranteed income for them when they retire. The payments from the permanent life insurance policy are called annuities, and the person receiving them is called the annuitant. If you are wondering what would happen if an annuitant dies before their policy term, you can rest assured that there are measures you can take to ensure the protection of your funds.
One way to deal with this concern is by getting the life annuity. This means that the annuity will be paid for as long as you live. The annuity payment will stop coming the moment you die. So, in this scenario, your policy term equals your life span.
Naming a Beneficiary as a Precaution
You can also address your concerns about dying before your policy term by naming someone as the beneficiary to your permanent life insurance annuity plan. This person is very often a spouse or domestic partner. With this safeguard in place, you can be confident that your annuity will continue to be paid to the person you want to see benefit from it.
To learn more about annuities, permanent life insurance, or any other aspect of life insurance, be sure to consult with a life insurance professional.