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When a policyholder passes away, beneficiaries will typically receive the death benefit payout. But it’s important to be aware that there are a few instances where life insurance won’t pay out. Top reasons life insurance won’t pay out may be because the policyholder lied on their application, their death was the result of suicide, or they passed away during the waiting period. Let’s dive deeper into how life insurance payouts work, how long it takes to receive a payout, and some reasons life insurance won't pay out.
To collect a life insurance payout, beneficiaries must file a claim after the policyholder passes away. Once the life insurance company receives a certified copy of the death certificate and claim form, they’ll likely process it and pay the beneficiaries via their preferred payout method.1 The average life insurance payout a beneficiary can receive vary based on the policy type, insurance company, riders, and other factors. Some types of life insurance payouts include:
The lump-sum payout is the most common option. With this type of payout, beneficiaries receive the entire death benefit at once in a single payment.
With a retained asset account, the proceeds of the policy are kept in an interest-bearing account. The beneficiaries can then use special checks to withdraw cash and will have to pay taxes on any interest they earn.
The specific income payout allows beneficiaries to receive monthly installments over a set time period while the money is held in an interest-earning account. This ensures that their funds don’t run out too quickly.1
Don’t wait until it’s too late. Help cover yourself and your family with coverage from Aflac.
Now that you know how life insurance payouts work, you may be wondering how long it takes for life insurance to pay out. In many cases, it takes anywhere from 14 to 60 days for beneficiaries to receive a life insurance payout. But many factors impact this time frame. These include the insurance company’s procedures, when the claim is filed, how long the policy was active, the cause of death, and state laws regarding insurance payouts.2
Fortunately, life insurance usually pays out the full value of the policy to the beneficiaries when the policyholder dies. Insurers are required to fulfill their promise of a pay out, as long as the policyholder paid their premiums. Sometimes, however, life insurance won’t pay out.
Here are some common reasons why life insurance won’t pay out:
If the policyholder stopped paying their premiums, the insurance policy may lapse. In this situation, the insurer can cancel the policy and not pay the death benefit.
Applying for a life insurance policy requires truthful answers about a policyholder’s health and lifestyle. If the policyholder lies on their application or withholds important information, the life insurance company might refuse the pay out.2
There are some states and life insurance companies with a suicide clause. The clause states a certain time period where the policyholder can’t pass away by suicide, or the life insurance policy won’t pay out. This period is usually within the first two years.3
If the policyholder passed away while engaging in illegal or criminal activities, the insurer can deny their claim. Even if the crime was committed unknowingly, the policy might not pay out.
A term life insurance policy doesn’t last forever. If the policyholder outlives their term, which might be 10, 20, or 30 years, there won’t be a payout.
Some types of life insurance come with a waiting period that may last between 12 months to 24 months.4 If the policyholder dies during it, beneficiaries won’t receive the death benefit payout.
If a life insurance company denies your life insurance claim and you believe their denial was wrong or unfair, you may follow these steps:3
The main purpose of having a life insurance policy is to help provide your beneficiaries with a payout or death benefit upon your passing. While life insurance payouts usually occur after a claim is properly filed, there are some instances where they’re refused by the insurer. As long as you and your beneficiaries become familiar with the reasons life insurance won’t pay out and how long it can take to pay out, you can prevent disappointments in the future.
If you're interested in a life insurance policy, check out Aflac’s term and whole life insurance plans. Contact an agent today to get a quote and request more information.
1 U.S. News & World Report - How Will Life Insurance Pay My Beneficiaries? Updated April 11, 2024. Accessed June 27, 2024. https://www.usnews.com/insurance/life-insurance/how-life-insurance-pays-beneficiaries.
2 Policygenius - How Long Does It Take to Get a Life Insurance Payout? Updated August 24, 2023. Accessed June 27, 2024. https://www.policygenius.com/life-insurance/how-quickly-do-life-insurance-companies-pay-out-death-claims/.
3 Policygenius - What to Do If Your Life Insurance Claim is Denied. Updated September 22, 2023. Accessed June 27, 2024. https://www.policygenius.com/life-insurance/what-to-do-if-a-life-insurance-claim-is-denied/.
4 Policygenius - What is the life insurance waiting period? Updated February 5, 2024. Accessed June 27, 2024. https://www.policygenius.com/life-insurance/insurance-waiting-period/.
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
Life (A68000 Series) - In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400. Term and Whole Life (B60000 Series) - In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Group Whole Life (Q60000 Series) - In Arkansas, Delaware & Oregon, Policy Q60100M. In Idaho Policy Q60100MID. In Oklahoma, Policy Q60100MOK. In Texas, Policy Q60100MTX. Group Term Life (Q60000 Series) - In Delaware, Policies Q60200M. In Arkansas, Idaho, Oklahoma, Oregon & Texas, Policies ICC18Q60200M, ICC18Q60300C, ICC18Q60400C.
Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.
Tier One Coverage
Life (Final Expense Life) - In Arkansas, Delaware, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22.
Tier One 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).
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’s family of insurers include Aflac, Aflac New York, Continental American Insurance Company, and Tier One Insurance Company.
Aflac WWHQ | Tier One Insurance Company | 1932 Wynnton Road | Columbus, GA 31999.
Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211
Z2300622R1
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