Supplementary Contract
What Does Supplementary Contract Mean?
A supplementary contract is an agreement between a life insurance company and a policyholder or beneficiary. These contracts define the terms under which the insurance company will pay out a life insurance policy. Since there are various methods for paying out a life insurance policy, supplementary contracts specify the chosen payout method and ensure that both parties adhere to the terms of the agreement.
Insuranceopedia Explains Supplementary Contract
Many people choose to receive their life insurance policy payouts in installments. In such cases, the installment amounts can be specified in a supplementary contract. For example, a beneficiary may choose to receive $1,000 per month from the life insurance company. The insurance company would then establish a supplementary contract with the beneficiary outlining this payout method, and the company would be obligated to continue the payments until the entire policy amount has been paid out. The settlement option you pick matters a lot in practice, which is why it helps to understand how to collect life insurance as a beneficiary before signing anything. Payout flexibility is also one of the things to compare when you’re shopping around for a policy through the best life insurance companies, since not every insurer handles installment contracts the same way.
