The death benefit from a life insurance policy is most commonly paid out as an income tax-free lump sum, unless the beneficiary of your insurance policy chooses to take the benefit as an annuity, or in installment payments. 

A life insurance death benefit can also be split: the policyholder can designate more than one beneficiary, for example, by dividing the benefit equally (or not) between the insured’s family members.

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If you own life insurance you may wonder how the benefits are paid out after you die.

There are a few different options the beneficiary may choose from to receive the death benefit from a life insurance policy, including:

• Lump sum payment.
  
• Checks to drawn on a checking account.
  
• Annuity payment on a period of time.
  

Learn more about how life insurance death benefits are paid out.


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