The amount of money paid to the beneficiary when the insured person dies. The death benefit is generally income-tax-free for the recipient. It can be paid as a lump sum, installments, or an annuity depending on the policy and beneficiary preferences.
Related Terms
Beneficiary
The person or entity designated to receive the proceeds of an insurance policy when the insured event occurs. In life insurance, the beneficiary receives the death benefit. You can name primary and contingent beneficiaries in case the primary is unable to collect.
Face Value
The dollar amount of coverage stated on a life insurance policy, also known as the death benefit amount. It is the amount the beneficiary will receive upon the insured's death, though the actual payout may be higher if the policy has accumulated dividends or riders.
Term Life Insurance
Life insurance that provides coverage for a specific period, typically 10, 20, or 30 years. If the insured dies during the term, the beneficiary receives the death benefit. If the term expires, coverage ends with no payout. Term life is the most affordable type of life insurance.