Death Benefit

What Does Death Benefit Mean?

A death benefit is the amount specified in a life insurance policy to be paid to the beneficiaries in the event of the insured’s death. In the case of an annuity, it may be a percentage of the annuitant’s monthly pension that becomes payable to the beneficiaries upon the annuitant’s death.

Since the payout goes directly to whoever is named on the policy, it helps to know the process beneficiaries follow to collect life insurance after the insured passes away.

It is also referred to as a survivor benefit.

Insuranceopedia Explains Death Benefit

The exact amount and payment structure of the death benefit depend on the specific life insurance policy. For example, if the policy includes an accident rider, the death benefit may be double the face amount. An accident rider is sometimes sold on its own as accidental death benefit coverage, and the rules for when it pays out vary by insurer. Additionally, the death benefit amount is subject to any outstanding loans on the policy, such as unpaid premiums or a policy loan previously taken against the policy.

Payout amounts and rider options vary from one insurer to the next, which is why it pays to compare the best life insurance companies before settling on a policy.