Everything You Need To Know About Life Insurance Death Benefits

A life insurance death benefit is the amount paid to the policyholder's nominee upon the policyholder's death. It is paid as a lump sum, or in instalments, and is tax-free under the current Income Tax Laws. Once the insurer receives all valid claim documents, the payout is settled within about 30 days. This money helps ease the immediate financial burden by allowing the family to cover funeral costs, pay outstanding loans, and replace lost income.

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What is a Death Benefit?

Death Benefits are the guaranteed or assured amount provided to the policyholder's nominees/beneficiaries in the event of their untimely demise. If the death claim application form is filled out correctly, the death benefit is paid within a month.
The policyholder can choose the type of death benefit payout. You can receive a lump sum at one time or a small amount over a long period.

Simply put, it’s the money- lump sum or otherwise that is paid to your beneficiaries in case you die while your life insurance plan is active.

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What is Covered Under Life Insurance Death Benefit?

It is essential to understand the situations in which the nominee or beneficiary is eligible to receive the sum assured as a death benefit under a life insurance plan. Below mentioned are some common situations that are covered:

The death benefit is paid if the policyholder dies from a covered health condition or natural causes.
In case of accidental death, the nominee can claim the death benefit, provided the policyholder was not under the influence of drugs or alcohol at the time of the accident.
If the policyholder dies by suicide, the death benefit is generally payable only if the suicide occurs at least one year after the policy purchase, as per most insurers' rules.
The death benefit may also be provided in cases where the policyholder passes away due to riots, war-related incidents, or other criminal acts, depending on the policy terms.

**Check your life insurance company's terms and conditions, as coverage and exclusions may vary by policy.

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What is Not Covered Under Life Insurance Death Benefit?

The different types of death not covered by the term plan are as follows:

Death by Suicide:

If the policyholder dies by suicide within the first year of purchasing the life insurance policy, the death benefit is not payable. However, after the first year, some insurers may refund some of the premiums paid, depending on policy terms.

Which Life Insurance Policies Offer Death Benefits?

In India, generally, all life insurance policies offer death benefits if the policyholder passes away during the policy term. These benefits ensure the insured's family's financial protection and are a key feature of every major life insurance policy.

Below mentioned are the types of life insurance policies in India that provide death benefits:

Term Insurance Plans
These are the pure protection plans that offer high coverage at low premiums. In case of your death, these plans provide a death benefit, and no maturity benefit is available.
Unit Linked Insurance Plans
A type of life insurance that combines investment and insurance, and offers death benefits along with market-linked returns.
Endowment Plans
These are the traditional savings-cum-insurance plans. In case of the death of the policyholder during the policy term, the sum assured plus bonuses (if applicable) is paid to the nominee.
Whole Life Insurance Plans
Whole Life Insurance offers coverage for up to 99 or 100 years. Death benefits are guaranteed and are one of the best choices for legacy planning.
Retirement or Pension Plans
Some annuity or pension plans include life cover during the accumulation phase. The nominee receives a lump sum death benefit if the policyholder dies before vesting.

How to File a Life Insurance Death Claim?

Inform the insurer: The nominee should notify the insurance company of the policyholder's death immediately by visiting a branch, contacting customer support, using the website, or emailing the insurer.
Submit the required documents: The nominee must share the essential documents, including the original policy document, a government-issued death certificate, a completed claim form, and valid identity and address proof. If the death occurred due to an accident, unnatural reasons, or during hospitalisation, the insurer may also ask for supporting records such as an FIR copy, post-mortem report, or hospital treatment papers. The nominee also needs to send their bank account information and a canceled check or a NEFT mandate. This will let the insurance company send the claim amount straight to the nominee's account.
Claim verification: After the documents are received, the insurer verifies the policy details and the details provided. If the policy is not very old, the claim verification might take a little longer.
The payout is received: After all the details are verified and approved, the insurer pays the death benefit and transfers the amount to the nominee's bank account within the stipulated time period.

Tax Savings on Life Insurance Death Benefits

A policyholder can also avail of tax benefits on term insurance premiums. Under Section 80C of the Income Tax Act, 1961, premiums paid are eligible for deductions of up to ₹1,50,000 per year. In case of the policyholder's death, the nominee receives tax-free death benefits under Section 10(10D). This makes term insurance with return of premium a comprehensive solution that safeguards your family from significant financial risks.

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FAQs

What does a life insurance policy's nominee get when the policyholder dies?

The nominee gets the death benefit when the policyholder dies. This money can help the family plan for their financial future by paying for things like loans, bills, their children's education, or funeral costs.
Does life insurance pay out on death?

Yes, life insurance pays out the sum assured as a death benefit if the policyholder dies during the term and the policy is active. The nominee must file a claim with the required documents to receive the payout.
What is death cover insurance?

Death cover insurance pays a lump sum when you die. The amount will be given to those you nominate as nominees/beneficiaries, who will receive an asset or benefit in case of the owner's death.
What happens when a life insurance policyholder dies?

When a life insurance policyholder dies, the nominee should inform the insurance company and submit a death claim and necessary documents. Once the claim is verified, the insurer pays the nominee the death benefit, as per the policy terms and conditions.
Is death insurance worth it?

Death insurance can provide a financial cushion to your family if your family totally depends on your income. The death benefit covers living expenses such as daily expenses, school fees, or paying off debts.
Who gets a death benefit?

You get a death benefit if you are a spouse, child, divorced spouse, or dependent parent.
Can I get death benefit in LIC policy?

Yes, you can get death benefits in LIC policy, given that the policy has death benefits listed under the features. You can go through the LIC policy documents to see if your LIC death insurance policy offers death benefits or not.
What is a death insurance policy in India 2026?

Death insurance policy in India 2026 refers to the death benefit insurance that offers a sum assured to the beneficiary in the policyholder's absence. The amount can help the nominees pay their bills, take care of remaining loans, and other monthly expenses.
How to claim death insurance?

To claim death insurance, the beneficiary should inform the insurer, submit a claim application form with necessary documents, and the company will process the death claim.

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˜The insurers/plans mentioned are arranged in order of highest to lowest Sum Assured(SA) offered by Policybazaar’s insurer partners offering term insurance plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI.

Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in

Rs. 400/month is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

Rs. 400/month (Rs.13/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 230 is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 8/day is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 12/day is starting price for a 75 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 497/month is starting price for a 1.5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 487/month is starting price for a 2 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 626/month is starting price for a 3 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 905/month is starting price for a 5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. ₹361/month is the starting price for a ₹1 crore loan cover with an 8% interest rate for an 18-year-old male, non-smoker, with no pre-existing diseases, loan tenure up to 20 years, rounded off to the nearest 10

+Rs. 1,267/month is starting price for a 7 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

*The full refund of premium is available on availing the one-time option of refund of premium. Total premium paid for policy (paid for add-ons) will be the special exit value, payable on availing the one-time option of refund of premium if you wish to completely exit the policy.

+Rs. 447/month is starting price for a 1 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs.679/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 910/month is starting price for a 3 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,374/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,924month is starting price for a 7 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

Women

+Rs. 400/month is Starting price for a 1 crore term life insurance for an 18 year-old Female, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

Rs. 461/month is the starting price for a 1 crore term life insurance for an 24 year-old female, non-smoker, with no pre-existing diseases, cover upto 54 years of age.

1,642/month is the starting price for a 1 crore term life insurance for an 44 year-old female, non-smoker, with no pre-existing diseases, cover upto 74 years of age.

Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited

We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30-minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881

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