How is the death benefit typically paid out in life insurance policies?

In life insurance policies, the death benefit is typically paid out as a lump sum. This means that when a policyholder passes away, the designated beneficiaries receive the entire amount of the death benefit all at once, rather than in smaller, periodic payments. This structure provides immediate financial support to the beneficiaries, allowing them to fulfill immediate needs such as paying off debts, covering funeral expenses, or managing ongoing living costs.

While there may be options for the payout to be structured differently, such as in monthly installments or through annuities, these choices depend on the specific terms of the policy and the preferences of the beneficiaries. However, the default and most common method is the lump sum, as it offers flexibility for the beneficiaries to use the funds according to their immediate financial requirements.