A life insurance payout is a sum of money that is paid out when the policyholder dies while covered by the policy. When you apply for life insurance, you will need to work out how much money your loved ones would need if you were no longer around.

Life insurance payouts follow a three-step process. First you notify the insurer. Second, they assess the claim. Third, the policy’s beneficiary receives the payout. A ‘beneficiary’ is the person who receives the payout. Once the policyholder dies, the beneficiary should contact the insurer.

Life insurance benefits are typically paid within 30 to 60 days of the filing of a claim, but delays can arise—if the insured dies within the first two years of the issuance of a policy, for example. Payout options include lump sums, installments and annuities, and retained asset accounts.