Help protect your family’s future. Enter your zip code to get your free quote today!

Get Your Free Quote

How Do Term Life Insurance Payouts Work?

Life insurance provides important financial protection for your loved ones, ensuring that they’ll have a financial safety net in the event of your death. However, your beneficiaries should know how term life insurance pays out, and what steps they’ll need to take to claim their death benefit.

Term life insurance payouts are generally provided in a lump sum. However, some policyholders may opt for their beneficiaries to receive payouts in installments.

Requesting Your Death Benefit

Life insurance benefits are paid after a policyholder has died. These benefits are paid to the beneficiaries named by the policyholder.

For many insurance companies, beneficiaries must take three main steps to receive their payout:

1. File a Death Claim

Term life insurance payouts begin with the filing of a death claim.

Experts recommend contacting the insurance company as soon as possible after the policyholder has died. Once this claims process has initiated, your insurance representative will likely ask you to begin supplying necessary paperwork to process the claim.

If multiple beneficiaries were named with the policy, each may need to submit his or her own claim form. If the primary beneficiary died before the policyholder, a contingent beneficiary (if named) can claim the term life insurance payouts.

2. Provide Proof of Death

Life insurance companies generally require a death certificate as proof that the policyholder has died. This usually must be a certified copy of the certificate, and can often be acquired from the county in which the policyholder has died.

If the policyholder died in a hospital or other medical facility, that institution may have completed the death certificate.

3. Wait for Approval

In general, term life insurance payouts are processed within 30 to 60 days of the claim’s date. However, several factors can delay payment.

  • A newer policy. If the policyholder purchased the insurance plan within two years of his or her death, beneficiaries may have to wait between six months and a year to receive benefits. That’s because many policies have what’s known as a contestability clause. This clause allows insurers to further investigate the claim, to ensure that no fraud has taken place.
  • Suicide. Most policies also have a clause that allows benefits to be denied if the policyholder committed suicide within two years of having purchased the plan.
  • Homicide. If homicide is listed on a death certificate, insurers may delay payments until the investigation rules out the beneficiary as a suspect.

If you have additional questions about the term life payout process, you can speak with a licensed agent at 1-800-966-7169 to learn more.

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

Help protect your family’s future. Enter your zip code to get your free quote today!

Get Your Free Quote

Related Information

Life Insurance Payout Process

In the event of the insured's death, a life insurance death benefit will be paid to the named beneficiary on the policy - provided a claim is filed.

Read More

Everything You Need to Know About Life Insurance Payouts

If you have a life insurance policy, a payout of the death benefit is preceded by a claim providing a death certificate.

Read More

How Do Life Insurance Benefits Work?

Gain a better understanding of life insurance benefits by reading through this comprehensive guide.

Read More

Who Gets Your Life Insurance Payout?

The person or entity that you name as beneficiary on your life insurance policy contract will receive the death benefit proceeds when you die.

Read More

How Does Term Life Insurance Work?

Find out how term life insurance works and get more information on the different types of term life policies that are available.

Read More

When To Expect Your Life Insurance Payout

It could take as little as two weeks to receive a life insurance payout if the policy is simple. Find out what can affect payout times.

Read More

What Is Term Life Insurance Able to Cover?

Term life insurance pays a death benefit to the policy beneficiary if the policyholder dies within the term of the policy.

Read More

Discovering How Whole Life Insurance Does Work

Whole life insurance is a type of permanent life insurance policy that accumulates cash value over time.

Read More

Understanding Term Life Insurance

Protect your family from facing a financial burden after your death with a term life insurance policy.

Read More