Protective Life’s Income Provider Option allows the policy owner to structure installment payments as a the death benefit. A partial initial lump-sum payment is also available. For grandparents Protective offer GrandLegacy. Preset installments for a life insurance payout is an innovative alternative to a lump sum payment, especially if a setting up a trust is prohibitively expensive. Since structuring a plan this way can be less expensive, it could provide a larger death benefit or make the coverage more affordable. However, inflation would erode the value of those installments and should be factored in.
Adding structure to a life insurance death benefit by installments or a setting up a trust may be of value depending on the situation. Installments can fill one primary purpose of life insurance: replacing lost income. Structuring payments would be prudent if beneficiary were too young or a spendthrift.
Beyond the grave control in estate planning can be counter productive. Bing Crosby with an estimated net worth at death of $600 million dollars set up a blind trust for his four sons from his first marriage that none could receive an inheritance until age 65. Only one son managed to live long enough to qualify and died at age 69. Two of Bing’s sons committed suicide at ages 51 and 56. One of those suicides was attributed to losing an inheritance set up by his mother.
Careful planning of the options and potential pitfalls of payouts at claims time for life insurance should be made. Some people when receiving a big amount of money can’t resist blowing it away.