Most beneficiaries can take one lump sum. Many policies also let you take payments over time, for life, or just the interest.
A lump sum pays all the money at once in one payment.
Other options depend on your policy. Nebraska lists fixed payments until the money runs out or for a set time. It also lists payments for the rest of your life, and interest only payments.
Some insurers pay into an account that works like a checkbook. You can write one draft for the full amount at any time. Ask about the interest rate and fees. Ask if it is FDIC insured.
The policy owner can sometimes choose the option ahead of time. Or they can let the beneficiary decide.
Taxes can change. The death benefit itself is usually not taxed. But if you take payments over time, the interest part of each payment is taxed.
- Lump sum
- Fixed payments for a set time
- Payments for life
- Interest only
- Checkbook style account
More questions
Do I have to decide right away?
No. Nebraska says take your time and do not let anyone rush you.
Is the payout taxed?
The death benefit is generally not taxed. Interest you earn on it is taxed.
What do I need to file a claim?
Call the insurer soon after the death. Have a copy of the death certificate ready.
Words to know
- Beneficiary
- The person you name to get the death benefit when you die. You can name more than one.
- Insured
- The person whose life the policy covers.
- Owner
- The person who owns the policy. They can use the policy values and make changes while the insured is alive.
