NEW YORK, May 7, 2022 (Newswire.com) - iQuanti: No one knows when their time will come, which is why life insurance is so important. It gives you peace of mind to know that your loved ones will be taken care of financially if something happens to you.
Getting whole or term life insurance quotes is the easy part, but what exactly happens after you die? Keep reading to find out how long it takes to get a life insurance payout.
What is a life insurance payout?
As long as you keep your policy in good standing, your life insurance company agrees to pay a benefit to your designated beneficiary when you die.
The life insurance payout is the sum of money paid by the insurance company to the policyholder or your beneficiaries when you die. Your beneficiaries can use it to cover funeral costs, pay off debts, everyday living expenses, or other purposes.
How long does it take to get a payout?
The answer depends on the type of policy you have. If you have a term life insurance policy, the benefit will be paid out if you die within the policy term. For example, if you have a 20-year term life insurance policy and you die two years into the policy, the benefit will be paid to your beneficiary.
If you have a permanent life insurance policy, the benefit will be paid out as long as your policy is in place. So, if you die fifty years after purchasing a permanent life insurance policy, the benefit will be paid to your beneficiary.
In some cases, the benefit can be paid out within 24 hours of your death, but it usually takes about 30 days for the life insurance company to process a claim and send the money to the beneficiaries. If there's complications, it could take longer.
The insurance company will need to confirm that the policyholder died and that the policy is in force. They'll also need to determine who the beneficiaries are. Once the insurance company has everything it needs, it will send the money to the beneficiaries.
If they are named as primary beneficiaries, they will get the full amount of the death benefit. If there are secondary beneficiaries, they'll get a portion of the death benefit.
How is life insurance paid to beneficiaries?
The death benefit can be used for any purpose, but it's often used to cover final expenses, like funeral costs and outstanding debts. It can also be used to replace lost income.
There are four different death benefit payment options:
- Lump-sum: A one-time, tax-free payment to the beneficiary.
- Installments: A series of payments made to the beneficiary over time.
- Annuity: A stream of payments made to the beneficiary over time, typically for a period of years.
- Life insurance policy: The death benefit is paid out as a life insurance policy to the beneficiary, who can then use the policy proceeds for any purpose.
The Bottom Line
Your life insurance company will pay out a death benefit to your named beneficiaries after you die. Depending on the verification process, your beneficiaries can receive a payout as quickly as 24 hours after your death or it may take more than 30 days.
Source: iQuanti, Inc.