Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Former Farmers Insurance CSR

UPDATED: Oct 30, 2020

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A death benefit on your insurance policy is an amount of money that may be paid out in a single lump sum or sometimes over a period of time in annuitized installments, in the event of your death during the period of coverage of your policy.death benefit

Who will receive the money?

A death benefit can usually be paid to any beneficiary you nominate, though different beneficiaries may receive different amounts depending on their circumstances (usually their age at the time the benefit begins) or your insurance contract.

For pensions in particular it is often possible to buy an annuity when your policy matures and this is intended to provide you with a lifetime income, many policies allow a spouse or other nominated party to continue to receive some of this benefit in the event of your death. The value of this benefit is almost certain to fluctuate based on the age of your spouse when the claim against the policy is made so that the insurer can take into account the level of risk that they may claim for a long period of time if there is considerable age difference between the parties.

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Is it possible to share a death benefit between different beneficiaries?

It depends on your insurance company and the contract you have with them, but many policies allow you to nominate multiple beneficiaries particular in the case of lump sum payments. For example you might have $100,000 of life insurance and want half this amount or $50,000 to go to your partner and you might wish your children to take an equal share of the remaining balance, so if you had two children this would be $25,000 each.

If you wish to share the benefits of a life insurance policy with multiple beneficiaries you will need to talk to your insurance agent or broker to see how this can be done in the most effective manner.

Why is a death benefit important?

If you are either the bread winner of your family or alternatively your income makes up a significant share of your living expenditure, it’s important that in the event of your death you can offer your loved ones some measure of financial security. Life insurance policies enable you to be certain that if the worst happens, your family will be able to survive financially after you are gone.

Additional Death Benefit Explanations