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How Do I Invest a Life Insurance Death Benefit? (Part 1)

By Byron Udell | December 31, 2015

In Part 1 of his two-part blog, Byron Udell, Founder and CEO of AccuQuote, gives helpful advice on how to make smarter decisions regarding any life insurance death benefit your family receives.

The death of someone you love is one of the most stressful experiences anyone can go through.

No amount of money can even come close to replacing a human life, but I’ve seen how financially devastating it is when someone dies without life insurance.  It’s not a pretty picture.

It’s critical to figure out the best way to manage the money that is left to you by the deceased.

A study performed in 2014 found that the average insured family spends the entire death benefit within three years. Careful planning and a little discipline can help avoid running out of money too soon.

Each situation is unique. Your family size, income, short- and long-term goals, the face amount of the life insurance policy, etc., will help to shape the plan you come up with.

The purpose of this article isn’t to provide in-depth investment advice. You may want to speak with your financial advisor before making any big decisions. That being said, I am a Certified Financial Planner (CFP) and a Chartered Financial Consultant (ChFC), so this is familiar territory for me.

Depending on the specifics, there are three ways I’d recommend my clients “invest” their death benefit:

  1. Annuitize the Benefit

For some people, it makes sense to spread the money out over a longer period of time instead of taking a single lump-sum payment. For those people, annuitizing the benefit is a terrific option.

You can structure the payments so you receive a check every month for a specified period of time, or you can receive payments for the rest of your life, guaranteed.  Watch the short video below to find out more:

I often suggest this option for people who are looking for guaranteed income and safe, predictable growth no matter how crazy the economy gets.

Since this is such a big topic, I’m going to split this post into two parts. Stay tuned for the second installment!

Happy New Year!

 

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