Settlement Options

Settlement Options, an option that is available to most (note not ALL) policies during the time of either death, maturity or upon surrender. I was told that its a common practice that during the cash out of a policy (i.e. death/maturity/surrender), a cheque will be sent to the beneficiary of the policy or policy owner.

What is not known is that there is actually this 'Settlement Option' whereby the beneficiary or policy owner can choose not to encash the cheque but instead to opt for any of the available settlement options given. Normally (NOT applicable to all) there are 4 different types of options given:

1. Received interest on proceeds with minimal withdrawal amount
- this means that instead of cashing out the payout amount, the money is place back to the insurance company and the beneficiary or policy owner is able to received interest on the amount regularly.

2. Received a fixed amount for a certain period of time.
- this means the beneficiary or policy owner is able to indicate how much they want to received and base on the amount of payout, the disbursement of money will be done regularly in the amount stated till the entire sum of amount is fully paid.

3. Received a certain amount for a fixed period.
- this means the beneficiary or policy owner is able to indicate for how long they would like to received a regular payout. The duration of this payout will be computed base on the amount of payout and amount to be received regularly.

4. Received life income.
- this is similar to taking the payout and converting it into an annuity.

In any case, DO check on your policy's terms and conditions for the exact Settlement Options available. Each policy is different in terms of the available options and interests rates. To exercise such an option, contact your Financial Service Consultant. You will need to write in formally to the insurance company to exercise your option.

**Policy must be in force for more than 5 years, the total payout amount must be more than SGD$5000 or the monthly interest paid out must not be less than SGD$100.

An interesting finding (: