Death Benefit

The death benefit is the sum of money paid by an insurance carrier to the named beneficiaries upon the insured's death, provided the policy is in force and the death is not excluded by policy terms. It is the primary purpose of life insurance — replacing lost income, paying debts, funding education, or transferring wealth. Death benefits from life insurance are generally received income-tax-free by beneficiaries under IRC Section 101(a). The death benefit can be structured as a level amount, increasing (to account for inflation), or decreasing (as in mortgage protection). Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance carrier.