How Does a Life Insurance Payout Work?

To claim a life insurance payout, contact the insurance company and provide a copy of the policyholder's death certificate. Once you forward the necessary documentation, the process will begin.

The insurance company will have payout options for your consideration. Most beneficiaries choose to receive a lump sum payment. Typically, the provider will transfer the money to you quickly.

The company may offer the alternative of a payment schedule. If you would prefer to receive a steady income over a certain period, this would be the better option.

If you are the beneficiary of a policy, there will be no taxes on the payout.

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