Average Life Insurance Payout Time
How long it takes to receive a life insurance payout depends on how the policy is structured and the nature of the claim. A typical payout time ranges between 30 and 60 days, but it could take as little as two weeks if the claim is straightforward. Payouts could be delayed if the insurance company needs to investigate the death in question.
Factors That Affect Life Insurance Payout Times
Once your loved one dies and you submit your claim, most states give the insurance company 30 days to review it and make a decision to pay it out. Or — if circumstances surrounding the death dictate — request more information.
Typically, less complicated beneficiary designations can expedite a payout. For example, a policy with a single beneficiary may pay out faster than a policy with multiple beneficiaries. According to the Law Dictionary, if you decide to receive annuity payments instead of receiving a lump sum, you can receive your first payment as quickly as 10 days after the claim is processed.
But there are a few factors that could result in the insurance company delaying payment. They include:
- If the claim form is incomplete or incorrect. It's critical that you submit all necessary information and fill out the claim form as accurately as possible. Failure to do so can result in delays processing your claim.
- If the death is ruled a homicide. Insurance carriers will typically hold off on paying a claim until law enforcement clears any beneficiaries of the crime.
- If the policy has a contestability or suicide clause. If the insured dies or commits suicide within the first two years of the life of the policy, it could delay a payout up to a year. It can also investigate the death and whether or not you lied on your application — and deny your claim — if you die during the contestability period.
Life Insurance Overview
Life insurance is a way for families to make up for the loss of income they experience when a loved one dies. Life insurance policyholders pay a premium and elect a beneficiary who will be eligible for payout if they pass away. Life insurance may entitle the policyholder to:
- Protect spouse/family from income loss
- Help cover funeral costs
- Create inheritance for heirs
- Other uses
It's important to note that a beneficiary may use a life insurance death benefit however they see fit.
Types of Life Insurance
The most common types of life insurance are permanent life and term life. Whole life insurance (also known as permanent life insurance) covers policyholders for their lifespan (assuming they pay their premiums on time and in full) and may generate cash value over time.
Term life insurance offers coverage for a specific amount of time, which can range from one to 30 years. In general, term life insurance premiums are lower than permanent life insurance premiums.
Get Help with Life Insurance
To learn more about life insurance, connect with a licensed life insurance agent at 1-855-303-4640.