When you buy a life insurance policy, you are betting on your own death. And so is the insurance company.
Joe Smith works at Big Rig Oil Co. He buys a life insurance policy for $3 million. He added on an additional death benefit to his policy. Joe works on an oil rig, which is a risky job. He wants to make sure his family is taken care of, in case of a catastrophic work event.
This is a predetermined set of circumstances that would pay out an additional sum of money. In Joe's case, if he died before retirement, his beneficiary (wifey # 2) would gain another $3 million benefit. Wifey #2 would then get the original death benefit of $3 million plus the additional benefit of $3 million...for a total insurance benefit payout of $6 million. Is there a Dateline episode here?
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Finance: What is a Beneficiary?25 Views
Finance a la shmoop.. what is a beneficiary? well in Latin, bene is
good so this is like a good place to catch fish...well close not [Old man fishing in the ocean]
really but being a beneficiary is good it means you get stuff like if you are
the beneficiary of weird uncle Al's will then you get his odd collection of hair
balls shaped like US presidents and thirty two thousand two hundred sixty [Uncle Al's will appears]
$9.32... in essence then you are the beneficiary of his will you are the one
set up to benefit by the death of someone who wanted to favor you with
their assets when they had you know passed on to the great beyond where hair [Uncle Al with white wings in heaven]
balls will fall....
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What is term life insurance, and variable life insurance? Hit play to find out, and, uh...let's hope you live long enough to figure out the answers.