What is a Death Benefit?
A Death Benefit is the amount of money paid to the beneficiary of a life insurance policy when the insured person passes away. This benefit is typically the policy’s face value or coverage amount, though some policies may offer additional benefits in certain cases, such as accidental death.
The primary purpose of the death benefit is to provide financial support to the deceased’s loved ones, helping to cover expenses like funeral costs, outstanding debts, and ongoing living expenses. In many policies, the death benefit is not subject to income tax, which can offer added financial relief to beneficiaries.