Do you pay taxes on a Life Insurance payout?
In the US, life insurance proceeds (the death benefit you mother will collect) is income tax free. The one exception is life insurance paid by an employer (your father's place of work) for his benefit. In that case the first $50,000 of death benefits are income tax free, the rest is taxed. If your father had a $250,000 policy at work, $50,000 would be tax-free and $200,000 would be taxed. Grey Rainbow is wrong After all this is settled, you and your mother should each meet with an insurance agent of a financial planner. It sounds like you have not received any thorough financial advice in a long time. Sorry for your loss. Good Luck.
What is the average payout for death benefits with life insurance?
I doubt there are any statistics with this information as the number would not give you any useful information. If you are asking how much coverage most people purchase, that is also not going to help you make a decision on the amount you should purchase.I discuss this topic is more detail here.One reasonable way to arrive at an amount of coverage is to imagine what your spouse (or other insurable interest) might need in the event of your death, now and in the foreseeable future.From experience, I can tell you most people that own life insurance are under- insured. For example, someone that bought a 20 year term policy at what might have been a reasonable death benefit and dies 18 years into the policy has not taken any inflation into account.Another important consideration is the return expected on any lump sum payment from an insurance company. With interest rates relatively low, more principal is necessary to achieve the same level of income.These factors and more should be discussed as part of any financial planning to be done, and should give you a clear understanding of your needs.
How does HIV+ affect the term insurance payout if the customer is diagnosed after taking the policy? Also, do insurance provider test for HIV before giving the policy?
If you own a life insurance policy and have had the policy in force for more than 2 years, the contestability period has expired, and you are covered, and the death benefit should be paid out without question if death of the insured occurs after the first two years.If the insured person lied on the application, and the material misrepresentation was the cause of the person's death, the insurance company can contest death of the insured if it occurs within the first two years of being insured.However, after 2 years, unless there is an exclusion for a specific illness which is the cause of death, the proceeds should be paid out on the life insurance policy if the insured dies from HIV.Yes, insurers do test for HIV when the paramedical exam is performed, there is a blood sample taken for testing by a laboratory.However, there are life insurance policies that do not require any medical exam, or blood or urine testing. Learn more about life insurance and HIV.
Can the IRS cease money from a life insurance payout (to you as a beneficiary) if you owe IRS money?
My mother received a life insurance payout after my fathers death. She owes money to the IRS (10K). She wants to pay the IRS half of what she owes (5k) but, just curious can they cease the entire funds? She wants to gift me half of the payout ($5K) Would I be held liable to pay taxes on that money? Would the IRS penalize her for gifting part of that money?
Life insurance payouts and inheritance?
1st off, sorry for the loss of your father. The other posters are pros in regards to insurance, since they make a living selling it, so they know what they are talking about. I am adding this only from personal experience, since both of my parents and my husband's parents have been gone in a period of 8 to 13 years. The life insurance will be pretty easy and settled most likely w/in 30 days on average. Hopefully your father when he changed the beneficiaries has made all 7 of his children "equal" in the distribution. So if for instance, the policy was for $100,000, each child once they verify their identity, would each get a check in their name for $14,285.71. But the estate depending on what kind of assets he had prior to his death could be a long term process to finalize. In our cases, it is hard to remember, but I believe it took anywhere from a year or 2 to close out the estates. Your sister is going to go through a trying process of being the executor, since she will have to pay debts your father owed and also may have to sell assets so that it can be distributed per your father's last wishes. I am hoping that your father also changed his will to reflect that all assets are distributed equally. But sometimes parents don't, and this will create problems with any of your siblings why someone gets more than someone else. There is also could be some issues with your mother, since at the time of his death, they were not "officially" divorced, and she might contest it. I don't know how long your parents were married, but for her to move, quit her job and take care of him, even after she filed for divorce, could have just stated, let the 7 kids take care of him and walked away. As a daughter who took care of my father during the last 2 weeks of his life, it was very stressful and between myself and other family members, had to coordinate our time with jobs to accomplish this. I must warn you, put aside the financial issues, but the biggest problem you may have is that depending how the insurance and estate is finalized, that many families are torn apart fighting and taking sides. It is not uncommon after an ordeal like this, that many siblings will stop talking to each other. Hopefully, you will all remain family when this is done. good luck
After death-- how long to recieve insurance money?
If her husband had life insurance and she is the beneficiary the insurer will almost always pay within 30 days on a valid claim - and often within a week of getting the death certificate. It's also a good idea to send them a copy of the obituary. BUT if the estate is the beneficiary she may have to wait until the estate is settled before getting the money - and then only after his estate's debts are paid. I know you feel for your friend, and you want to help. Very admirable. Just please make sure you know what you're getting into, and please, please get an agreement in writing as to when she will pay you back. Be sure not to say "as soon as she gets the insurance money". Put a specific time table for repayment. It has nothing to do with trust, and I'm not saying she's scamming you. But with your most important relationships better to make sure everyone is clear about what is supposed to happen so you can minimize miscommunications that can only lead to angry, hurt feelings and lost friendships. Good luck!
How long should it take to get life insurance paid out?
My father in law passed away and my mother in law seems to be getting the run around in getting his life insurance money. The policy was with Colonial Penn (and they paid in over the years more then she will be getting back). My father in law had been sick for years and money is very tight due to the huge medical costs. How long should it take colonial penn to pay her. She has sent in all the paperwork and death certficate. Is there a certain amount of time they have (legally) to pay. It has been 3 weeks now, and poor mom-in-law max out the credit cards to pay for the funeral. I just hope Colonial Penn is legimate and does not give people a hard time. When my father passed away my mother had her money in less then a week but it was with a large reputable investment firm.
If the father of my child dies, does any life insurance money go to me for child support?
Maybe, but…I am assuming the child is a minor?A minor cannot delegate money and payouts. The best and easiest strategy for access to the funds is if a Trust (a legal structure) is made the beneficiary with instructions for payout to the child.If there is no Trust and the father dies while the child is a minor, the COURT will appoint a guardian for the child - which is likely to be you, the mother. Here is the crazy part - that process takes TIME and sucks up a LOT of the money that should go to the child as legal fees for the lawyers and courts are pulled from the child’s money.If you can get a trusted friend to ensure the dad is aware of that loophole, then it would be wise if he goes to his bank or lawyer and ask about setting up a Trust and naming the Trust as the beneficiary of his estate and leave instructions for the Trust to make a payout to the child.If you are considering life insurance on you, I recommend the same thing - because even if you are not the child’s main money contributor - you may still want to put a policy on yourself to gift your child something on your passing. If you need help with that, feel free to reach out to me, or to ask more questions. Create Your Abundance & Cover Your Assets