Should I boost a death benefit to convert the cash value of a life insurance policy?
My husband became disabled several months ago, and I became his legal guardian/representative. I am also the beneficiary of his life insurance. I contacted the company to find out how to use the life insurance money to care for him. I was informed that to make a claim I needed a special form which was not available on the website. However, I was not informed of the ability to convert the cash value (of roughly $20K) over and above the death benefit (of roughly $100K). At the time my husband was still alive, and has since passed. I am wondering, since I have yet to file a claim, whether or not it is acceptable to request the advised "boost in death benefit." I do not want to leave cash on the table.
I am sorry for your loss.
Under insurance law there has to be a corridor between the cash value and the face value of the policy. This means the death benefit must be higher than the cash balance inside the policy (under normal circumstances). When the cash balance in the policy is above the face value, the death benefit the to you will be the cash value plus the corridor. If you check your last insurance statement or call the company, they will tell you the cash balance and what the death benefit is currently.
I am not sure what a boost in death benefit is referring to, unless you are referring to the approximately $20,000 over the face value of the policy. This will be included in the death benefit you get along with the extra amount for the corridor, when you file your claim for death benefits.
Filing the claim normally requires a certified death certificate and maybe an insurance form. I would suggest contacting the insurance company quickly and get the claim process underway. From what you described you will not be leaving any money on the table. It is yours, so go claim it.
It sounds like you are talking about a policy in which the total death benefit includes the face amount and the cash surrender value. In that case, the total amount payable to you should be over the $100,000.
The carrier should pay the total amount automatically. A simple phone call to the claims department will give you an answer.
I am sorry for your loss. I just went through this process with both my mother, and a client who was also a close friend. It's very tough losing people. Having some ready cash does make it a bit easier:)
You'll need to check with the insurance company. They could have a way to get you a higher death benefit, but you may have to receive it over an extended period of time. Let them discuss your options first so you'll know exactly how to file the claim form. Good luck!
Thanks for asking your question on Investopedia! I cannot give you legal advice and do not have all the necessary details to evaluate your question. However, let me try to help. It sounds like you are asking about the conversion of cash value to an increased death benefit. While that option may have existed prior to his passing, my guess is that you may have lost that option after his death. I would encourage you to request it, nonetheless, if the policy seems to allow that. Best of luck!