What is Death Benefit?
Insurance glossary entry on BeCovered.ai for the term "Death Benefit": The amount paid to beneficiaries when an insured person dies under a life policy. Scope: plain-language meaning for coverage discussions; confirm definitions on your policy forms.
The amount paid to beneficiaries when an insured person dies under a life policy.
Understanding Death Benefit
Death benefits may be level, increasing, or decreasing depending on product design. Loans and withdrawals on permanent policies can reduce the net paid to beneficiaries unless repaid.
Examples
- $500,000 term policy paying a lump sum to listed beneficiaries.
- Universal life with a declining net death benefit option tied to cash value.
- Accidental death riders paying an additional amount for qualifying events.
Common Questions About Death Benefit
Are death benefits taxable?
Generally income-tax-free for beneficiaries on individual life insurance, but estate tax and transfer issues can apply for large estates or incidents of ownership—consult a tax advisor.
How long do claims take to pay?
Many clean claims pay in weeks once death certificate and forms are received; contested circumstances, foreign deaths, or policy incontestability issues can extend review.
Related Insurance Types
Related Terms
Rider
An add-on provision to an insurance policy that changes or extends coverage.
Premium
The amount you pay to your insurance company for your coverage, typically monthly or annually.
Coverage Limit
The maximum amount your insurance company will pay for a covered claim.
Exclusion
Specific situations, conditions, or types of damage that your insurance policy does not cover.