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How Do Life Insurance Payouts Work?

If you're the beneficiary of a life insurance policy, you will need to file a claim with the insurance provider when the policyholder dies to receive the payout you’re entitled to. Once you file the claim and provide a copy of their death certificate, the insurance company will process it. If no complications arise, the insurance company should release the funds to you within a few weeks. Follow the steps below to ensure you receive your life insurance payout as quickly as possible. 

Understanding Life Insurance Payouts

If you're filing an insurance claim, you may have options for how to receive the payout. Most claims are paid out as a lump-sum (all at once), or you may be able to receive it in annual installments.

Average Payout Time

Insurance companies usually pay the death benefit 30 to 60 days after the claim is filed, and in some cases, sooner. If you have a straightfoward claim, you may receive the designated payout amount within 10-14 business days.

Reasons For Delay

If the policyholder dies within the first two years of the policy being issued, there is a contestability period that allows the insurance company to investigate the original application and verify everything in the application was accurate. The review process can take time, and may delay the payout up to 12 months.

Another common hold up in the payout process is the large amount of paperwork insurance companies need to verify and complete before benefits can be distributed. The number of beneficiaries named on the policy may also affect how quickly you receive the payout.

Reasons a Claim Could Be Denied

Life insurance companies can deny a life insurance claim for a number of reasons. Some of the most common reasons are listed below.

  • The type of death was not covered in the policy. If there are exclusions in the policy for certain causes of death, you may not receive a payout.
  • The policyholder lied on their application. If the life insurance company determines that the policyholder lied about any information on their application, they can refuse to pay out the death benefit. This includes information about the policyholder's tobacco and alcohol use, dangerous hobbies and health status.
  • The policyholder stopped paying the premiums. If the policyholder doesn't pay the premiums for their policy and their coverage lapses, their policy is no longer active and their beneficiary will not receive a payout. 

If you are a beneficiary who believes you have been denied a claim by mistake, we suggest contacting the insurance agent who administered the policy.

Find Out More 

To learn more about life insurance payouts and find the policy for you, speak with a licensed agent at 800-966-7169.


*Applications for insurance may be subject to acceptance by insurer. Rates and coverage amounts will depend upon the carrier selected.

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