In life insurance death benefits are benefits paid to beneficiaries in the event of death. The payout amounts depend upon the life insurance policy.
- Death benefits are not considered income and are typically “tax free”. You can learn more about the tax implications of death benefits from the IRS.
- Death benefits can be paid in lump-sum amounts or installments.
- Some life insurance will let you take death benefits, at least in part, for long-term care. This is known as accelerated death benefits.
- Some life insurance policies let you take “living benefits” which are amounts that can be paid out of death benefits during the policy holders life.
- Term life insurance only pays out in death benefits, while whole life typically pays death benefits and cash value.
- Riders can affect the way death benefits are paid out.
- Universal life insurance allows the policy holder to adjust premiums and death benefits throughout the policy.