If You Have A 100,000 Life Insurance Plan..do You Have To Pay 100,000 Dollars To Your Act To Recieve Benefits?
Posted December 10, 2009 – 4:40 pm in: structured settlements FAQif you have a 100,000 life insurance plan..do you have to pay 100,000 dollars to your account to recieve benefits?
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No, you pay what is called a premium ie. a monthly fee. You get your $100,000 benefit as long as you pay your premium, no matter when you expire. The insurance company gathers all the premiums it receives and invests the money. The return should be enough for them to pay out the benefits in the long run Now, some people die young and some people die old. Therefore, there are policies which the insurance company has to pay at a loss and some at a gain. However, it will average out OK. These 2 factors combined, the insurance company will come out ahead. Otherwise, they will not be in this business.
If you have a $100,000 life insurance policy, the insurance company pays the $100,000 face amount of the policy to your beneficiary if you die during the period the policy is in effect.
With a term life insurance policy, you must die within the term of the policy.
With a whole life policy, the coverage is in place your entire life (as long as you pay the premium).
You do not have to pay $100,000 for the plan to pay benefits to your beneficiary.
You pay the premium to the insurance company. The premium is usually a small percentage of the life insurance coverage amount.
For instance, if you have a $100,000 10 year level term life insurance policy your annual premium may only be $500.
The premium depends on your age, gender, type of coverage, amount of coverage, your health, occupation, hobbies and your family’s health history.
I hope that helps! Best of luck to you.
To learn how term life insurance works visit http://www.term-life-online.com/how-term…
NO.
First, I am assuming that you are talking about whole life and not term insurance. Different policies can have different clauses. I am also guessing that you are the owner of the policy in question. Policies with which I am familiar work as follows:
You pay monthly premiums until the policy matures. You can choose to pay an additional sum which will pay the premiums should you become disabled.
Should you die, the policy will pay the face value of the policy, in your case $100,000. If you borrow money against the policy, the amount received by your beneficiaries will be reduced by that amount. i.e. you borrow $20,000 against your $100,000 policy and have paid back $5,000. Your beneficiaries will get $85,000.
Most policies have a suicide clause which will reduce the amount your beneficiaries will receive in the event of your suicide.
If you are talking term insurance, that’s a little different. You pay the premiums for the agreed amount of time — often 20 years. At the end of the time period, the policy owner receives payment for the face amount of the policy. Most people have term insurance for minor children. Usually, the owner of the policy receives the amount paid into the policy, generally the face value, and sometimes a small amount of interest. If death occurs to the insured, the face amount of the policy is paid to the beneficiaries.
It’s not a plan, it’s a contract. And normally, the FACE VALUE of the policy is the payout amount when you die – probably the $100,000 you’re talking about.
You would pay anywhere from $100 to $3,000 a year for that much coverage, depending on your age and health, and the type of policy it is.
It’s NOT a savings account. It’s a bet with the insurance company – you’re betting you’re going to die, they’re betting you’re going to live. The premium you pay in vs. the payout amount – the face value – tells you what the “odds” are on your bet.