Life Insurance Death Benefit

A life insurance death benefit is the tax-free payout given to a policy's beneficiary when the insured person dies. The insurer releases the funds once the beneficiary submits a valid death certificate and any required claim forms.

Depending on how the policy was set up, this payout can help cover final expenses, replace lost income or settle debts. In most cases, beneficiaries receive the death benefit as a lump sum, but some policies allow for installments or annuities. The length of the process, anywhere from a few days to several weeks, depends on how quickly you submit documents and whether the death requires investigation.

Life insurance death benefits are typically paid within 30 days of filing a claim. However, the process can take longer depending on the circumstances of death and how quickly documents are submitted. Here's a general timeline of what to expect:

After a death, the financial process can feel overwhelming. Here's what beneficiaries or executors usually need to do to manage the estate and access life insurance funds:

Most life insurance claims go through smoothly. However, some situations can delay or complicate the payout process, particularly if they involve a policy's contestability or exclusion clauses.

Planning a funeral is often one of the first major expenses a family faces after losing a loved one. According to the National Funeral Directors Association (NFDA), the national median cost for a funeral with a memorial service and burial in 2023 was $8,300. For a funeral with cremation, the median cost was $6,280. Actual costs vary widely based on location, service preferences and burial method. The graphic below outlines common funeral expenses to help you understand what to expect and plan accordingly.

Military families are eligible for unique funeral and life insurance benefits not typically available to civilians. These programs provide support with final arrangements and survivor compensation.

Military Funeral Benefits

Military honors and burial assistance are available at no cost for eligible service members and veterans, whether the burial occurs in a military or private cemetery.

• Funeral honors: Families are legally entitled to have at least two uniformed service members fold and present the flag and play “Taps,” either live or recorded. Additional honors may be offered based on personnel availability.
• Burial eligibility: Veterans, active-duty members, and their spouses and dependent children may be buried in one of 135 VA national cemeteries or in a state veterans’ cemetery.
• Private cemetery benefits: Families who choose private burial can still get a free government grave marker or headstone, burial flag and Presidential Memorial Certificate.
• Burial allowances: The VA may reimburse funeral expenses, including $722 for burial and plot if the veteran died in a VA hospital, or $300 if the veteran received a VA pension or disability.

Financial Benefits for Survivors

Survivors of service members may qualify for immediate payouts and ongoing financial support, depending on the nature of death and policy enrollment.

• $100,000 death gratuity: A lump-sum benefit is paid to next of kin if the service member dies on active duty or within 120 days of separating due to a service-connected condition.
• Dependency and Indemnity Compensation (DIC): Monthly payments may be available to survivors if the death is linked to a service-connected condition.
• SGLI coverage: Most active-duty members are automatically enrolled in Servicemembers' Group Life Insurance (SGLI) with up to $400,000 in coverage. Payouts are typically issued within four to six weeks.
• Policy conversion options: After separation, service members can convert SGLI to a commercial policy, apply for a two-year disability extension or switch to Veterans’ Group Life Insurance (VGLI) within one year and 120 days.
• Suicide exclusions: SGLI may still pay benefits in suicide cases after the standard exclusion period, but DIC may not. Traumatic Injury Protection under SGLI does not cover suicide attempts or self-inflicted injuries.
• Mental health support: A NIH-backed study found rising suicide rates among soldiers, including those who had not deployed. If you or someone you know is struggling, professional help is available.

We covered how life insurance death benefits work, from claiming the payout to handling special circumstances like suicide clauses and homicide investigations. We broke down key financial steps for survivors and provided guidance for military families.

To move forward with confidence, gather essential documents early, understand what your policy covers, and don’t hesitate to seek expert or emotional support. Whether you're a beneficiary or executor, knowing what to expect can help you manage a difficult time with clarity and care.

Navigating life insurance death benefits and final expenses can be overwhelming, especially during a challenging time. Here are answers to some frequently asked questions to help clarify important concepts:

Why Trust MoneyGeek?

MoneyGeek evaluated 1,488 life insurance quotes along with data on customer satisfaction, financial strength, product availability and the overall buying experience. Our rankings are based on a combination of independent data sources and our proprietary scoring system to help consumers choose the best life insurance for their needs.

Recency

Coverage costs and company data were updated in 2025 to reflect the most recent available information.

How We Ranked Life Insurance Companies

MoneyGeek created a scoring system to compare insurers across five core categories. Companies were selected based on national availability and the ability to generate quotes online. Each category could receive up to five points, and the scores were weighted to create an overall MoneyGeek rating out of 100.

Weightings by Policy Type

Standard Life Insurance Rankings:

• Affordability: 30%
• Financial Stability: 25%
• Buying Process: 20%
• Customer Satisfaction: 15%
• Product Diversity: 10%

Whole Life Insurance Rankings:

• Financial Stability: 35%
• Customer Satisfaction: 25%
• Buying Process: 20%
• Product Diversity: 20%

No-Exam Life Insurance Rankings:

• Product Diversity: 35%
• Financial Stability: 25%
• Customer Satisfaction: 20%
• Buying Process: 20%

Cheap Life Insurance Rankings:

• Affordability: 50%
• Financial Stability: 15%
• Buying Process: 20%
• Customer Satisfaction: 5%
• Product Diversity: 10%

Affordability was not factored into the whole life or no-exam rankings, as quotes for those policies were not collected.

Data Sources

Each company’s score included:

• Life insurance cost data obtained through online quote tools
• Financial strength ratings from AM Best and the insurer’s years in business
• Customer complaint data from the National Association of Insurance Commissioners (NAIC), based on reports from 2020–2022
• Availability of digital tools and payment options to simplify the buying process
• Breadth of life insurance products offered by each insurer

Sample Customer Profile

Quotes were based on a standard applicant profile:

• 40-year-old male
• Nonsmoker
• 5 feet 11 inches, 175 pounds
• Excellent health rating

MoneyGeek also adjusted this profile to test a variety of scenarios. Variables included age, gender, health status, tobacco use, height, weight and geographic location. We collected quotes for term policies with different coverage amounts and term lengths.

Data Modeling

To expand the analysis, we identified trends in the quote data and used those patterns to create projections. This allowed us to compare insurers even in cases where direct quotes were limited.

Below are some resources that could help you learn more about life insurance death benefits and final expenses.

• The Federal Trade Commission's Funeral Rule lists your rights when planning funeral arrangements.
• The IRS explains when you do and don't have to pay taxes on life insurance funds.
• The U.S. Office of Personnel Management explains recent changes to FEGLI, an insurance program for federal employees.
• The U.S. Department of Veterans Affairs offers guidance on survivors' benefits, including bereavement counseling in qualifying cases.
• The National Association of Insurance and Financial Advisors (NAIFA) can be a resource to find a financial advisor.
• The National Association of Personal Financial Advisors (NAPFA) can help connect you with an advisor.
• The American Association of Retired Persons (AARP) provides a checklist of tasks and documents required when a loved one passes away.
• Mental Health America (MHA) offers guidance on what to expect from the grieving process.