How long does it take to get a life insurance payout?

Nobody wants to think about what might happen after a loved one’s death — but if you’re the beneficiary on a loved one’s life insurance plan, it’s a good idea to understand how the life insurance payout process works.

Many people don’t realize what they need to do to claim a death benefit, for example — and if you’re depending on that money to help you cover your loved one’s final expenses, pay off medical bills or make your next mortgage payment, it’s a good idea to know exactly how long it might take to receive a life insurance payout from a loved one’s life insurance policy.

How long does it take to get money from a life insurance death benefit? In most cases, it doesn’t take very long to receive a life insurance payout — but there are a few factors that can slow down the process and make it more difficult for a beneficiary to receive their death benefit. Here’s a quick overview of how life insurance payouts work, as well as an estimation of how long it might take to receive your money after a death.

How do life insurance payouts work?

Before you can receive a life insurance payout, the life insurance issuer needs to be made aware of the policyholder’s death. Somebody associated with the policyholder needs to file a death claim with the life insurance company.

“Anybody can report a death and file a claim,” says Jeff Butcher, Digital Life Claims Consultant at Haven Life’s parent company, MassMutual. “A beneficiary, a friend, a relative, even a lawyer.” Most life insurance death claims, including Haven Life death claims, can be completed online. The person filing the death claim will need to locate and provide a copy of the death certificate, which is often the most time-consuming part of the process — but life insurers are ready to work with you to make the death claim as easy to complete as possible. “You can send us a photo of the death certificate from your phone,” Butcher explains.

After a death claim has been filed, the life insurance issuer will reach out to any listed beneficiaries. “We express condolences, explain the [life insurance payout] process and ask if they have any questions,” says Butcher. If a life insurer needs any additional information from listed beneficiaries, such as an updated address or bank account information, they’ll collect it during these conversations.

How long does it take to receive a life insurance payout?

How long does it take to get life insurance money? “If everything is in good order, we can pay out the claim right away,” Butcher explains. Haven Life, for example, aims to pay all qualifying claims within 24 hours of receipt. 

Most life insurance payouts are distributed as a tax-free, lump sum payout. This means that if you are the sole beneficiary on a $500,000 term life insurance policy, you’ll receive the entire $500,000 at once. If the death benefit is divided among multiple beneficiaries, each named beneficiary will receive their percentage of the life insurance payout. 

How long will it take to receive your life insurance payout from your life insurer? Many life insurance companies send life insurance payments directly to a beneficiary’s bank account via electronic funds transfer (EFT). Some life insurance companies still send your life insurance payout in the form of a mailed check, although that’s becoming less common these days. 

Since lump sum life insurance payouts can be large, some banks may hold your benefit money for between 24 and 48 hours before depositing it into your bank account. Keep that in mind if you know that you are going to receive a life insurance death benefit, don’t spend any of your life insurance payout until your bank has successfully validated the transaction and given you full access to the funds.

What factors might delay your life insurance payout?

There are a few reasons why it might take longer than expected to receive your life insurance payout. If a life insurance company has trouble locating a beneficiary, for example, it could take longer to complete the payout process.

“This is why it’s important to update your beneficiary information,” Butcher told us. If you are a life insurance policyholder, it’s important to keep your policy information as current as possible. If your adult child is a named beneficiary on your life insurance policy, for example, make sure you update your policy every time your child moves to a new address. With Haven Life, updating your life insurance beneficiary information is as simple as logging into your online account — so don’t put it off!

It’s also a good idea to include a contingent beneficiary on your life insurance policy — just in case something happens to your primary beneficiary. “If the primary beneficiary dies before the policy pays out, the life insurance death benefit goes to the contingent beneficiary,” Butcher explains. “If there is no contingent beneficiary listed, the payout defaults to the estate.” 

Many policyholders list a minor child as either a primary or contingent beneficiary — but they don’t realize that in order for a minor to receive a death benefit, they also need to name an executive guardian or custodian. This custodian will receive the death benefit on the minor’s behalf and ensure that the money is successfully managed until the child reaches the age of majority. “This is the easiest way to ensure that a minor receives their life insurance payout,” says Butcher. 

There’s one more reason why a life insurance payout might be delayed — and it has to do with what is called a contestable claim. If a life insurance issuer has reason to suspect that a policyholder lied on their application (by not disclosing a pre-existing illness, for example, or by not admitting to regular tobacco use) the life insurance company will contest the claim and begin an investigation into the nature of the policyholder’s death. Depending on the results of the investigation, a contestable claim could either delay or eliminate your life insurance payout completely — but most people won’t have to worry about contestable claims affecting their life insurance payout.

How long does it take to get a life insurance payout? Rest assured that most life insurance companies want to make it as easy as possible for you to receive your life insurance money — and thanks to digital claim forms and electronic bank transfers, the entire process could take as little as a few days. Consider it one more benefit of an affordable term life insurance policy.