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Policyholders buy life insurance to protect their loved ones, which they name as beneficiaries. Once the policyholder dies, there is a process the insurance company goes through to determine if they should or should not payout.

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Here’s what to expect for a life insurance payout timeline, as some companies make you wait a few weeks, but some make you wait a few months.

The First Step

After a loved one dies, you must file a claim with the life insurance company. Today, most life insurance companies offer an online option to make it easier and more private to file a claim. The complexity of filing the claim depends on the type of policy and manner of death.

The average life insurance payout time is 2 weeks but can take more or less time depending on various issues.

Accidental Death

For example, if the insured had an accidental death rider on his/her policy, the beneficiaries must provide proof that the death was an accident and complete more paperwork. The insurance company will tell you what else they need to investigate the claim and make a decision.

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At the very least, you must provide the death certificate for a term or whole life insurance payout. Each policy has various requirements, though, so make sure you read the fine print.

If the death isn’t ‘clear cut’ and the insurance company needs more information before paying out, they’ll conduct an investigation. This may include requesting specific documents like police reports (accident or crime) or medical reports if the reason for death is questionable.

It can take an insurance company two weeks to two months to pay out an insurance claim, so make sure you file the claim quickly to get things started. After receiving documentation and determining the cause of death, the actual payout could be more than the face value (if there were riders) or less if they uncover any violation of the policy.

Note that:

Each insurance company has a different payout schedule for whole and term life payout schedules. For example, Prudential and Met Life payout fast – usually in five to ten business days. But companies like Primerica can take as long as six weeks to payout.

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What Are the Life Insurance Payout Options?

The insured determines how to distribute the policy payments. Most policyholders set the policy for a lump sum payment, paying out any remainder of the life insurance policy that was paid out before death. This pays the beneficiaries the full amount of the policy at once. This is helpful when you need the money to cover your loved one’s final expenses or need money right away to cover the daily cost of living if the deceased was the breadwinner.

Other payout options include:

Installment payments – The policyholder can set up a payment schedule, such as a specific percentage for a set number of years. Policyholders earn interest on the amount undistributed that sits in the account.

Life income – This pays beneficiaries for their entire life. The amount distributed at each payout depends on the age of the beneficiary, the death benefit amount, and the beneficiary’s life expectancy. If the beneficiary dies before exhausting the benefits, the life insurance company keeps the money.

Life income with period certain – This guarantees the beneficiary receives payment for at least a certain number of years. If the beneficiary dies before the period expires, his/her contingent beneficiary receives the remainder of the payments.

Are there Tax Implications?

All life insurance proceeds are tax-free. The policyholder paid taxes on the income used to pay the premiums. The rest is tax-free for the beneficiaries. It doesn’t matter how much you receive or who receives it; there aren’t any taxes.

There is one exception, though.

Any interest policyholders or beneficiaries earn on the money triggers a tax liability. You never pay income tax on the principal amount received. However, if you receive money in installments or interest is earned any other way, any money withdrawn tied to interest earnings triggers a tax liability.

What are the Reasons Life Insurance Won’t Pay Out?

Each policy has different rules. Most deaths are covered, but there are reasons life insurance won’t pay out, including:

  • Two-year waiting period: Many guaranteed and simplified issue life insurance policies have a 2-year waiting period. If your loved one dies within those two years, you may receive only the premiums the policyholder paid up until that point, plus a small percentage (usually 10 – 20%).
  • Death by suicide: Most policies don’t cover death by suicide but read the fine print
  • Death by crime: If the policyholder’s death was due to a crime AND the policyholder was involved in crime (doing something illegal), then the death benefit may not payout.

What Causes a Claim to be Delayed?

Some payouts take longer than others because of specific delays. Here are the most common:

The policyholder died during the contestability period

Most policies have a 2-year contestability period. If the policyholder dies within 2 years, the insurance company may do more investigations to determine if everything the policyholder stated on the application was true. They also make sure the policyholder didn’t omit any information from the policy that would have affected the decision to insure.

Incomplete forms

When you file the claim, read the documents carefully, and provide all required information. Forgetting the death certificate or omitting other important documentation could delay the process.

Death by suicide

Suicide and Life Insurance - insurers have payout exclusions and strict clauses

If the death is presumed suicide, the insurance company will likely investigate the death to determine the cause. If the policyholder was outside of the 2-year waiting period but there are still questions about the death and its legitimacy (drugs, alcohol, etc.) the insurance company may delay payout.

What Happens with a Lapsed Policy?

If the policyholder stopped making payments, the insurance policy lapses. If this happens, you won’t receive a payout.

Make sure the insured always makes his/her payment within the 30 day grace period. If the policyholder can’t make payments, it’s important to talk to the insurance company to figure out other options. Some companies have payment arrangements, yet other policies allow you to use the policy’s cash value to cover the premiums.

Letting the policy lapse means no payout.

What to do with the Insurance Proceeds

Beneficiaries can do what they want the insurance proceeds, but in general, they use them for:

  • Final expenses including the funeral, burial, and final medical expenses
  • To pay off the deceased’s debts

Once the final expenses and policyholder’s debts are covered, beneficiaries can do what they want with the funds, which may include:

  • Paying off their own debt
  • Investing the money for retirement
  • Paying for a child’s college education
  • Using the money to buy a house


Does life insurance payout straight away?

Most life insurance companies have a process that takes at least a week, but usually longer to pay out life insurance claims. If there’s anything that makes them think there is fraud or a reason to deny the claim, payouts take even longer.

How long does it take to get a life insurance check?

It can take up to 45 days to receive a life insurance check. Each state has requirements regarding how long a life insurance company can take to send payment. The exact time depends on the situation and if there are reasons to deny or delay the payout while an investigation takes place.

Is there a time limit to claim a life insurance policy?

No, there isn’t a deadline beneficiaries must adhere to after the policyholder dies. While it’s in your best interest to file the claim right away to get payment, especially if you need it for final expenses, it’s not always possible. Sometimes beneficiaries don’t realize a policy exists until months or even years down the road. As long as the policy was intact when the policyholder was alive, you can file a claim.

What percentage of life insurance policies are paid out?

Only about 2 percent of term life insurance policies payout because 98 percent of the insured outlive the policy. Whole life policies (which last for the insured’s entire life) have a 15 – 20% payout rate because most policies lapse before the insured dies.

Does life insurance payout for suicide?

Most insurance policies don’t payout for suicidal deaths if it occurred within the first two years. Each policy has its own requirements regarding suicide after the initial 2-year period. Some payout, but many do not.

Who gets the life insurance payout after death?

The named beneficiaries on the policy chosen by the policyholder receive the insurance payout.

Bottom Line

Life insurance payouts happen at different times depending on the life insurance company’s policies and the circumstances of the death. Filing a claim right away and following the insurance company’s guidelines helps ensure you get the money as fast as possible.