The beneficiary should get a claim form from the insurance company. The insurance company will need, the name of the insured, a policy number and a certified copy of the death.

The beneficiary will have choice of ways to receive a death benefit. Settlement options could include the following:

• A lump sum payment
• An installment payment usually with interest
• A checking account where the beneficiary receives a check book and can withdraw money when need
• The insurance company could hold the benefits and pay interest

You generally do not have to pay income tax on death benefits.

Get advice from your lawyer or account on this matter.

It is illegal for a stranger to take out an insurance policy on your life. The stranger has no insurable interest and could have an unhealthy desire to see you die sooner than nature intends, so that his can collect the death benefit.

A life insurance policy is like anything else, if you own it, you can sell it, even to a perfect stranger who has no conceivable insurable interest, who then becomes the policy owner and can then name himself as the beneficiary.

There are Viatical Insurance Buyers and Sellers of life insurance policies and they call themselves viatical settlement firms. The viatical firm buys insurance policies from people with terminal illnesses and sells them to investors.

A Life Insurance Policy is based upon life of the person named in the policy. The policy is paid out when the following events occur: death, accidental death or sickness.

In return the policy owner agrees to pay a premium at regular intervals or in a lump sum.

Life Insurance policies are legal contracts and the terms of the contract describe the limitations, specific exclusions are often written into the contract to the limit the liability of the insurer, for example most claims relating to suicide before 2 years of the date the policy is written will not paid in full.

The beneficiary receives policy proceeds upon the death of the insured person and only the owner can change the beneficiary and only the owner can designate the beneficiary to his policy.

If the insured person dies during the term, the death benefits will be paid to the beneficiary. It is the most inexpensive way to purchase a death benefit on the coverage amount.

Because Term Life is a pure death benefit, its use is to provide for covering financial responsibilities to the insured such as: to cover consumer debt, dependent care, college education for dependents, funeral costs and mortgages.