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If you have a life insurance policy, the death benefit or payout your beneficiaries can receive after you pass away will depend on several factors, such as the type of payout they choose. Let’s dive deeper into life insurance payouts and the average payout amount.
When you die, your beneficiaries will need to file a claim with your life insurance company. Upon approval, they can choose how they’d like to collect their life insurance payout, which is also known as the death benefit. While options vary by insurer, here are some common payout types:
With a lump-sum payout, your beneficiaries will receive the entire payout at one time. They’ll then have all the funds to use in any way they wish. This is typically the simplest and most popular option.1, 2
An installment payout is when the insurer will pay your beneficiaries a certain amount of money on a fixed schedule, which may be monthly, quarterly, or yearly. Eventually, they’ll receive all the money they’re owed.2
The specific income payout is when the insurance company places the payout into a taxable, interest-bearing account. Then, the beneficiaries receive monthly or annual payments of an amount they choose.1
If they’d like, your beneficiaries can convert your life insurance policy to an annuity. With this option, they’ll receive guaranteed payments for the remainder of their life.1, 2
A retained asset account works like a checking account for your beneficiaries. The insurer will hold the payout in an account that accrues interest, and they can write checks against it as they need to.1, 2
Don’t wait until it’s too late. Help cover yourself and your family with coverage from Aflac.
Not all life insurance payouts are created equal, and may depend on several factors covered below. On average, however, a typical life insurance payout in the U.S. is about $168,000.3
These factors will help dictate your life insurance payout:
The face value of your policy is the dollar amount it’s worth, or the amount paid out to your beneficiaries when it expires.
The type of policy you have, whether it’s term life insurance or a permanent policy like whole life or universal life insurance, will play a role in your payout.
If you have a permanent life policy with a cash value component and choose to withdraw funds from it, the payout will be reduced.
Riders are optional features you can add on to life insurance for an additional cost. They can help cover events or situations your standard policy doesn’t and may impact the payout.
Typically, life insurance companies pay out within 60 days of when they receive a death claim from the beneficiaries.4 These factors can all impact the timeline:
A lump-sum payment, for example, will likely be easier and faster for a life insurance company to pay out than a specific income payout or retained asset account.
If any documents, like a death certificate or police report, are missing or inaccurate when a claim is filed, the payout may be delayed.
In general, life insurance payouts that involve multiple beneficiaries take longer to receive than those with a single beneficiary.
Life insurance is intended to help cover death due to natural causes, like cancer or a heart attack. So, if the cause of death wasn’t natural, the payout process might take longer.
Each state has its own rules and regulations for life insurance payouts that may expedite or prolong the process.
Aflac offers term and whole life insurance that can help your beneficiaries receive financial protection in case you pass away. You may get approved for a policy quickly with no medical questions. Chat with an agent and get a quote today!
1 U.S. News & World Report - How Will Life Insurance Pay My Beneficiaries? Updated April 11, 2024. Accessed April 16, 2024. https://www.usnews.com/insurance/life-insurance/how-life-insurance-pays-beneficiaries.
2 Investopedia - How Does Life Insurance Work? Updated April 29, 2023. Accessed April 16, 2024. https://www.investopedia.com/articles/personal-finance/121914/life-insurance-policies-how-payouts-work.asp.
3 RetireGuide - Facts About Life Insurance: Must-Know Statistics in 2023. Updated July 6, 2023. Accessed April 16, 2024. https://www.retireguide.com/life-insurance/statistics/.
4 Policygenius - How Long Does It Take to Get a Life Insurance Payout? Updated August 24, 2023. Accessed April 16, 2024. https://www.policygenius.com/life-insurance/how-quickly-do-life-insurance-companies-pay-out-death-claims/.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York.
68000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. 65000 series: In Virginia, Policies ICC0965JTO & ICC0965JWO. B61000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Delaware, Policies B61JWO, B61JTO. B60000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series/Whole: In Arkansas & Delaware, Policy Q60100M. In Idaho, Policy Q60100MID. In Oklahoma, Policy Q60100MOK. Not available in Virginia. Q60000 series/Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C. Not available in Virginia.
Final Expense insurance coverage is underwritten by Tier One Insurance Company. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908).
In AR, AZ, ID, OK, OR, PA, TX and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22.
Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations, and exclusions.
Aflac WWHQ | Tier One Insurance | 1932 Wynnton Road | Columbus, GA 31999
Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211
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