Insurance Part 1 of 3: Life Insurance Buyers’ Common Q&As Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Tumblr (Opens in new window)Click to share on Pinterest (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Mint.com Published Jun 23, 2017 4 min read Advertising Disclosure The views expressed on this blog are those of the bloggers, and not necessarily those of Intuit. Third-party blogger may have received compensation for their time and services. Click here to read full disclosure on third-party bloggers. This blog does not provide legal, financial, accounting or tax advice. The content on this blog is "as is" and carries no warranties. Intuit does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog. After 20 days, comments are closed on posts. Intuit may, but has no obligation to, monitor comments. Comments that include profanity or abusive language will not be posted. Click here to read full Terms of Service. Understanding your policy’s death benefit. Q: How long does it take my beneficiaries to get my life insurance death benefit? Once the death benefit claim form and a copy of the death certificate have been received by the carrier, beneficiaries typically receive the death benefit check in two weeks. However, if the insured dies within the contest-ability period (which is typically two years) the death benefit may take longer because the life insurance company has the option to investigate the claim if they choose do to so. Q: How do I know my beneficiaries will get paid the death benefit? Life insurance companies are not in the business to rip people off. As long as your policy is inforce at the time of your death (in other words, the premiums were paid up-to-date) your beneficiaries will receive the death benefit payout. There are only a few exceptions to this, which we discuss in detail below. Q: Are there any situations in which my life insurance policy won’t pay out? There are three instances in which a life insurance company can choose to deny or reduce a term life insurance policy’s death benefit. One: Contest-ability Period Life insurance policies include what is called an Incontestability Clause. This clause states that the life insurance company has a specific period of time (typically two years) to dispute the validity of the insured’s statements made on an application. So, if you die within the contest-ability period, the life insurance company has the right to investigate the details of your medical history to ensure you did not misrepresent yourself on the application. For example, stating that you did not smoke cigarettes when, in fact, you did up until the day you died. In a situation like this, insurance companies have the right to withhold some of the death benefit from your beneficiaries or even deny the claim altogether. Two: Suicide Clause Another situation in which the life insurance company has the right to deny a death benefit is if the insured commits suicide within a certain period of time, again typically within two years. In this situation, however, the life insurance company will return all premiums that have been paid to date to the family. Three: Homicide The last situation in which an insurance company may not pay a death benefit is if the insured was murdered. If the insured was murdered, the life insurance company will typically call the police department involved and inquire as to whether or not the beneficiary of the policy is a suspect. If the beneficiary is a suspect, the life insurance company will hold payment until the charges are dropped or the beneficiary is deemed not guilty of the crime. Q: Will my term life insurance death benefit payout be taxed? Term life insurance is the least complicated type of life insurance and in most cases your beneficiaries will not have to pay federal or state income taxes on the death benefit they receive. Since the policy premiums are paid using after-tax dollars, Uncle Sam already got his cut. There are two main exceptions to this rule: Estate taxes Gift taxes If you own your own policy, the death benefit proceeds become part of your taxable estate. If your estate exceeds the exclusion amount, which is over $5 million dollars, it can get taxed. For most people, this isn’t an issue. The second exception is what is known as “The Goodman Triangle.” If the policy owner, insured, and beneficiary are three different people, the death benefit could count as a taxable gift to the beneficiary. Q: How can I be sure my policy’s life insurance carrier will still be around when I die? All major life insurance companies have financial strength ratings. There are multiple agencies each with their own rating scales and standards that assess the long-term financial stability of these insurance companies. These ratings typically follow the school-like A through F scale. The higher the rating, the more stable the company is and the more likely the company will be able to pay future claims. When you are looking to purchase life insurance, whatever means you are using to buy it through should tell you the insurance company’s rating. Any company with an A rating or better is considered financially stable and you should not worry about any future claims not being paid out. Natasha Cornelius is the content manager and editor for Quotacy. She has worked in the life insurance industry since 2010 and has been making life insurance easier to understand with her writing since 2014. A long-time Mint user, Natasha lives in Bozeman, Montana where she loves to garden, DIY anything she can, and explore beautiful Big Sky country. Connect with her on LinkedIn. Previous Post How to Buy Term Life Coverage Online Next Post Part 2 of 3: Life Insurance Buyers’ Common Q&As Written by Mint.com More from Mint.com Browse Related Articles Mint App News Intuit Credit Karma welcomes all Minters! Retirement 101 5 Things the SECURE 2.0 Act changes about retirement Home Buying 101 What Are Homeowners Association (HOA) Fees and What Do … Financial Planning What Are Tax Deductions and Credits? 20 Ways To Save on… Financial Planning What Is Income Tax and How Is It Calculated? 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