Life Insurance Death Benefit Payouts: What Your Family Needs to Know

Date:

Trending

It is important to know more about life insurance policies and their operational modalities. The most important factor is, of course, the pre-fixed insurer payout or death benefit. It is given to policyholders’ nominees in case the former dies within the policy tenure, for term insurance plans, or at any time in the case of whole life insurance policies. Now, talking about life insurance death benefit payouts, you should always be aware of certain things in this regard.

- Advertisement -

It matters since it enables much-needed financial relief for the family if something happens to you within this period. They can use this money to take care of various expenses without compromises. This helps them stay afloat financially without having to compromise on their aspirations or sell assets to survive. Let us now check out some vital aspects concerning these death benefit payouts.

What To Know Regarding Life Insurance Death Benefit Payouts

Here are the specific aspects worth noting about life insurance death benefit payouts:

- Advertisement -
  • The death benefit is the fixed or assured amount given by the insurance company to the policyholder’s nominees upon his/her death, depending on the policy type and its terms.
  • Beneficiaries typically receive the payout in the form pre-selected by the policyholder. Depending on the policy terms, this could be a lump sum payout, monthly amounts, or a combination of both.
  • Death benefits may include coverage for suicide, provided it takes place after one year from the policy’s inception. However, this varies by insurer, and specific terms should be checked in the policy document.
  • If there is an accident, the policyholder should not have been intoxicated. Claims may be rejected if intoxication is indicated in the postmortem report, depending on the policy terms.
  • For deaths owing to natural causes or illnesses, coverage is typically provided, although claims related to undisclosed pre-existing conditions might be denied.
  • There is no coverage if the policyholder passes away due to any hazardous activity that is not declared during the underwriting process or if death results from self-inflicted injuries.
  • Deaths resulting from STDs or alcohol/drug abuse may not be covered, depending on the policy. Coverage for natural disasters is generally included unless specifically excluded in the policy.

Death Benefit Tax Quotient

Are the life insurance death benefit payouts taxable? Based on Section 10 (10D) of the Income Tax Act, the sum assured is tax-free, provided the annual premium does not exceed 10% of the sum assured for policies issued on or after 1 April 2012. For older policies, the threshold is 20%. This is a major relief to nominees who have to cope with life in the absence of their family member and primary breadwinner.

Get Life Insurance Today

Now that you have an idea about the life insurance death benefit payouts and their conditions, it is time to choose these policies at the earliest. This is because you should financially safeguard your loved ones from the impact of your demise as early as you can. Make sure you compare multiple policies across insurers before finalizing one that meets your specific requirements. It is essential to opt for a higher coverage amount that can comfortably meet your family’s requirements despite future inflation.

THE SNAPSHOTS

Sign up to get quick snaps of everyday happening, directly in your inbox.

We don’t spam! Read our privacy policy for more info.

- Advertisement -

Support our independent journalism PayPal (Outside India) For PayU (For Indian Readers).

Krishna Mali
Krishna Mali
Founder & Group Editor of TechGraph.

More Latest Stories

More Articles

“We Are Not America”: Canada’s New PM Mark Carney On Trump’s Comment On Making it 51st state

In his first public remarks, Canada's New Prime Minister, Mark Carney, reaffirmed Canada's independence and firmly rejected any notion that the country could ever...

US President Trump Presses NATO on Greenland Annexation Plans

During a meeting with NATO Secretary-General Mark Rutte on Thursday, US President Donald Trump argued that acquiring Greenland is essential for maintaining global stability and security. "Well, I think it'll happen. And I'm just thinking, I didn't give it much thought before, but I'm sitting...

UK PM Kier Starmer Abolishes NHS England To Bring Health Services Under Govt Control

British Prime Minister Keir Starmer has announced plans to abolish NHS England and bring...

VIDEO: US President Donald Trump Calls NBC A ‘Worst Network’ On Television

During a press meeting at the Oval Office on Wednesday, US President Donald Trump...

From Startup to Success: Essential Steps for Landscaping Entrepreneurs

Starting a landscaping business is so exciting, blending creativity with the reward of transforming...
00:02:23

‘Canada Ripping Us’: US President Trump Criticizes High Tariffs on Dairy and Lumber

U.S. President Donald Trump on Friday slammed Canada’s high tariffs on American dairy and...

Trade War: Canadian PM Justin Trudeau Announces 25% Tariffs On US Imports

Ottawa: Canadian Prime Minister Justin Trudeau on Wednesday announced a 25% tariff on U.S....

RP-Sanjiv Goenka’s Firstsource Opens ANZ HQ and AI Lab in Melbourne

Firstsource Solutions Limited (NSE: FSL, BSE:532809), an RP-Sanjiv Goenka Group company, today announced the...

The Role of Edge Computing in AI-Powered Cloud Solutions

With businesses including artificial intelligence (AI) in their operations, cloud computing has grown in significance for its administration and processing. Conventional cloud-based artificial intelligence...

Meta CPO Chris Cox Sells Shares Worth $8.3 Mn

Meta Platforms (NASDAQ: META) Chief Product Officer Christopher Cox sold 13,556 shares of the...

Meta COO Javier Olivan Offloads Shares Worth $409,768

Meta Platforms (NASDAQ: META) Chief Operating Officer Javier Olivan is set to sell 608...

The Rise of Conversational AI: What It Means for Tech and SaaS Businesses

Back in the time, when AI was not as prominent, businesses used to struggle...

Demand for plumbers in Oman: which specialists are most in demand?

The demand for skilled plumbers in Oman is steadily increasing due to the country's...

Meta Executive Chris Cox to Sell $13.5 Million in Shares

Meta Platforms (NASDAQ: META) Chief Product Officer Christopher Cox has filed to sell 20,000 Class A shares worth approximately $13.55 million, according to a...

Logistic Startup Picckup Secures $500K in Seed Funding to Expand Electric Fleet

A Mohali-based mid-mile and last-mile logistic startup, Picckup, on Thursday, raised $500K in series seed round funding led by We Founder Circle (WFC), with participation from marquee angel investors from India, Australia, and the USA. The company plans to use the capital to expand its...

Empowering Communities with Water Tech

This is a major problem worldwide; it affects billions of people in homes, villages,...

IIT Madras and SPF Partners to Enhance Policy Framework for Indian Startups

Indian Institute of Technology Madras (IIT Madras) has entered into a Memorandum of Understanding...

Beyond Firewalls: How Threat Intelligence Platforms Are Transforming Cybersecurity Operations

“Cybersecurity isn't just about building walls—it’s about seeing the enemy before they strike.” In...

Leveraging AI and Modern HR Solutions to Transform Recruitment Strategies for Skilled Workers

In today’s competitive job market, recruitment strategies are rapidly evolving, driven by advancements in...

BC Originals: Exclusive Casino Games on BC.Game

BC Originals are special, exclusive casino games that are just for BC.Game players. All...

Dogsee Chew draws $8 Mn in series B round from Ektha & Others

Natural pet treat brand Dogsee Chew on Thursday said, it has raised $8 million...

Vishal Puri On Spalba’s Tech-Driven Approach To Venue Booking & Planning

Speaking to TechGraph, Vishal Puri, Co-Founder of Spalba, explains how its platform uses technologies...

INTERVIEW: ADDA’s Krishanu Mukherjee on Transforming Gated Communities

In an interview with TechGraph, Krishanu Mukherjee, AVP of Growth at ADDA.io, explained how...

Wired vs. Wireless Headsets: A Comparative Guide for Evolving Audio Needs

Across a wide range of demographics, including gamers, fitness enthusiasts, business executives, and remote...

The Rise of Conversational AI: What It Means for Tech and SaaS Businesses

Back in the time, when AI was not as prominent, businesses used to struggle...

Sachin Tendulkar Backed RRP Electronics Partners with Deca Technologies To Enhance Semiconductor Packaging

Cricketing legend Sachin Tendulkar-backed semiconductor manufacturer RRP Electronics has signed a strategic partnership with...

Ways Technology Can Help Your Business Performance

Businesses of all sizes and across every industry are integrating technology to improve their...

Adani Wilmar Gets Shareholders’ Approval to Rebrand as AWL Agri Business Limited

Stock exchange-listed Adani Wilmar Limited announced on Tuesday that it has received approval from...

Pakistan Begins Rice Exports to Bangladesh Under New Government Deal

Bangladesh and Pakistan have resumed direct trade for the first time since 1971. The...

Demand for plumbers in Oman: which specialists are most in demand?

The demand for skilled plumbers in Oman is steadily increasing due to the country's...

INTERVIEW: ADDA’s Krishanu Mukherjee on Transforming Gated Communities

In an interview with TechGraph, Krishanu Mukherjee, AVP of Growth at ADDA.io, explained how...

Choosing the Right Tax Consultant: A Guide for Businesses and Individuals

For both individuals and businesses, tax planning and compliance are crucial aspects of financial...

Wired vs. Wireless Headsets: A Comparative Guide for Evolving Audio Needs

Across a wide range of demographics, including gamers, fitness enthusiasts, business executives, and remote...