Create an Income Stream
Taking initial withdrawals of 4% or considering annuities are often recommended to retirees.
This provision sets a time limit of two years during which the company has the right to void the contract for "material misstatements" made in the application.
A material misstatement is where you made a mistake when you answered a question during the application process, and the question is important enough, that it would change the insurance company's decision to offer you insurance.
However, if you intentionally gave them a false answer, that is fraud. A policy can be ended at any time if they find out you committed fraud.
This is when the insured dies and the company discovers that the insured’s age in the original application was incorrect. The company then pays an amount equal to the amount of insurance which the premium would have purchased at the correct age.
The amount paid could be more or less than the face amount. It depends on whether the insured’s age was overstated or understated.
Companies are permitted to include a suicide provision in their policies. A suicide clause generally states that if the insured dies by suicide during the first two years, the death benefit will be limited to the total premiums paid.
After the first two years, the full death benefit is payable in the event of suicide.
At your death the policy proceeds may be paid to your beneficiary:
In a lump sum
Be kept with the insurance company to earn interest
Or be paid out in installments in the form of an annuity payment
Your policy will have a table showing the various options available to you and your beneficiary.
You may select an option on behalf of your beneficiary or you may wish to let your beneficiary decide at the time of your death.
You should discuss this matter with your agent or company when your policy is issued.
This article is published on KansasMoney.gov. Find more information by contacting these state agencies: