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The Lump-Sum Failure


By: Ted Bernstein

Can Your Beneficiaries Afford a “lottery-type” Payout?

A growing number of people think not.

We don’t often get second chances, especially with the benefit of hindsight.  One of the most common complaints about life insurance is how the proceeds are paid to our beneficiaries. Chances are overwhelming that the proceeds of your existing life insurance policies will be paid like lottery proceeds – in a Lump-Sum.  This may be okay with winnings from gambling.  It may be far from okay with the proceeds of your life insurance policy.

Every day I am asked to simply explain “The Installment Option”.  At the risk of oversimplifying, the installment option is the equivalent of buying a pre-determined income stream from a life insurance company at a deep discount compared to the lump-sum alternative.

“There is no way that a lump-sum payout is best for my family.  I could not imagine a worse time for my wife to receive a large, lump-sum payment that we intended to last 20 years”, says Carlos Romero from Boca Raton, Florida. “There is simply too much that can go wrong.  After learning about the installment option, we were relieved to find a much lower cost policy that guarantees the coverage is there when needed most”, offers Mr. Romero.

Once aware, 8 out 10 life insurance buyers prefer the installment payout option. The icing on the cake is either lower premiums or more life insurance. There is a Hybrid version that combines a partial lump-sum with equal installments paid over a pre-determined number of years, selected at the time of purchase.

Depending on the payout period, annual premiums for the installment life option can be 50% less for the same amount of coverage or 50% more coverage compared to a lump-sum policy.  There are millions of life insurance buyers who can take a few simple steps to protect their families as intended.

With life insurance proceeds only lasting between 3-5 years on average, a better way had to emerge.  Since 2007, life insurance buyers have requested an installment option.  Ask any owner of life insurance how long he or she intends the proceeds to last and the answer is always longer than 3-5 years.  To compensate, people use trusts and money mangers to pay the proceeds over time.  This can be expensive and offers no guarantees.

Income Stream to the Rescue.  Instead of a lump-sum payout, consider the installment payout option which essentially is like buying a guaranteed income stream to protect your family. You can customize the payout according to your individual planning objectives.  There may be tax considerations to consider as a portion of the proceeds are paid as gains.

Visit the web site for information and help comparing the installment payout option versus your current policies.


Ted Bernstein is a third-generation licensed life insurance specialist and nationally recognized industry innovation expert in alternative distribution strategies and life insurance product development with decades of speaking out and advocating for changes on behalf of consumers. A member of the Association for Advanced Life Underwriting, he was the first to introduce life insurance without commissions or “no-load” life insurance in the mid-1980s and launch the first fee-based Life Insurance Policy Audit and Review service for trust companies and life insurance fiduciaries. His newly introduced innovation, the Installment Life Option, is game-changing. To learn more, visit or call 561-988-8984.


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