Insurance claim payouts: how much compensation can you expect?

October 16, 2014

It can be tricky to calculate what your insurance compensation could be if ever you make a claim. However, it's important to know what you can expect before a calamity occurs.

Depending on the details of the incident or event, as well as your type of insurance policy, the compensation you might receive could vary widely. Are you sure that your current policy will provide enough for you and your family? Has it been adjusted for the cost of living? The best way to be ready is to educate yourself on how to calculate your compensation.

Insurance claim payouts: how much compensation can you expect?

What are your payout choices?

There may be a range of payout options, depending both on your policy and the kind of claim you're making. Because of this, one factor in determining your insurance compensation is the payout option you choose. Possible options include:

  • Lump sum payment, in which the entirety of your payout is made at once
  • Advance payment, which can provide payment on a claim to provide for immediate needs such as housing and food
  • Partial payment contingent on certain conditions

Are there other payout options in the event of a death benefit claim?

Life insurance payouts do sometimes offer their own alternative plans, since they often serve as a way of helping dependants survive the loss of a provider. Some of these options include:

  • Life income, which grants the beneficiary guaranteed fixed payments for the remainder of his or her life
  • Life income within a certain period, which is similar to the above option except that it lasts for a set number of years (rather than a lifetime)
  • Joint and survivor income, which offers a guaranteed amount paid out to two or more beneficiaries for life

Be sure to speak with your insurance company about all the available options.

How are personal injury payouts determined?

For personal injury settlements, there are a variety of factors that must be considered before a payout takes place. This is calculated through something called a "damage formula," which the insurance company will use to determine liability. A liable person is required to pay an injured person for:

  • Expenses related to medical care
  • Lost income from missed work or other sources
  • Physical suffering and pain
  • Loss of education, social and/or family experiences
  • Emotional suffering caused by any of the previously mentioned points

Taking these factors into consideration, the insurance company will determine what is owed.

What are some other deciding factors in a payout?

Actually, there are quite a few, but some of the major ones include:

  • The amount of pain caused by the injury
  • The invasive nature of the medical procedures
  • The length of the recovery time
  • Permanent physical or mental effects of an injury

Being aware of these factors can help you make more informed decisions. Your best bet, though, is always to speak with your insurance company directly, to make certain you fully understand their policies and get the best coverage for yourself.

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