Aflac Supplemental Insurance (2025)

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When a policyholder passes away, beneficiaries will typically receive the death benefit payout. But it’s important to be aware that there are a few instances where life insurance won’t pay out. Top reasons life insurance won’t pay out may be because the policyholder lied on their application, their death was the result of suicide, or they passed away during the waiting period. Let’s dive deeper into how life insurance payouts work, how long it takes to receive a payout, and some reasons life insurance won't pay out.

How do life insurance payouts work and what is the average payout amount?

To collect a life insurance payout, beneficiaries must file a claim after the policyholder passes away. Once the life insurance company receives a certified copy of the death certificate and claim form, they’ll likely process it and pay the beneficiaries via their preferred payout method.¹ The average life insurance payout a beneficiary can receive vary based on the policy type, insurance company, riders, and other factors. Some types of life insurance payouts include:

Lump-sum payout

The lump-sum payout is the most common option. With this type of payout, beneficiaries receive the entire death benefit at once in a single payment.

Retained asset account

With a retained asset account, the proceeds of the policy are kept in an interest-bearing account. The beneficiaries can then use special checks to withdraw cash and will have to pay taxes on any interest they earn.

Specific income payout

The specific income payout allows beneficiaries to receive monthly installments over a set time period while the money is held in an interest-earning account. This ensures that their funds don’t run out too quickly.¹

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How long does life insurance take to pay out?

Now that you know how life insurance payouts work, you may be wondering how long it takes for life insurance to pay out. In many cases, it takes anywhere from 14 to 60 days for beneficiaries to receive a life insurance payout. But many factors impact this time frame. These include the insurance company’s procedures, when the claim is filed, how long the policy was active, the cause of death, and state laws regarding insurance payouts.²

Does life insurance usually pay out?

Fortunately, life insurance usually pays out the full value of the policy to the beneficiaries when the policyholder dies. Insurers are required to fulfill their promise of a pay out, as long as the policyholder paid their premiums. Sometimes, however, life insurance won’t pay out.

6 reasons life insurance won’t pay out

Here are some common reasons why life insurance won’t pay out:

The policyholder stopped paying premiums

If the policyholder stopped paying their premiums, the insurance policy may lapse. In this situation, the insurer can cancel the policy and not pay the death benefit.

The policyholder lied on the life insurance application

Applying for a life insurance policy requires truthful answers about a policyholder’s health and lifestyle. If the policyholder lies on their application or withholds important information, the life insurance company might refuse the pay out.²

Death from suicide

There are some states and life insurance companies with a suicide clause. The clause states a certain time period where the policyholder can’t pass away by suicide, or the life insurance policy won’t pay out. This period is usually within the first two years.³

Death from criminal activities

If the policyholder passed away while engaging in illegal or criminal activities, the insurer can deny their claim. Even if the crime was committed unknowingly, the policy might not pay out.

A term life insurance policy expired

A term life insurance policy doesn’t last forever. If the policyholder outlives their term, which might be 10, 20, or 30 years, there won’t be a payout.

The policyholder died during the waiting period

Some types of life insurance come with a waiting period that may last between 12 months to 24 months.⁴ If the policyholder dies during it, beneficiaries won’t receive the death benefit payout.

What to do if your life insurance claim is denied

If a life insurance company denies your life insurance claim and you believe their denial was wrong or unfair, you may follow these steps:³

• Contact the insurer: Reach out to the life insurance company directly. Ask them to send you a full report or detailed explanation about why your claim was rejected.
• Involve the state insurance department and attorney general: The state insurance department in your state and attorney general can provide you information about the appeals process.
• Hire an attorney: If you decide to go through the appeals process, it may be in your best interest to consult a qualified attorney. They can guide you through the appeal and increase your chances of success.

Get a life insurance quote

The main purpose of having a life insurance policy is to help provide your beneficiaries with a payout or death benefit upon your passing. While life insurance payouts usually occur after a claim is properly filed, there are some instances where they’re refused by the insurer. As long as you and your beneficiaries become familiar with the reasons life insurance won’t pay out and how long it can take to pay out, you can prevent disappointments in the future.

If you're interested in a life insurance policy, check out Aflac’s term and whole life insurance plans. Contact an agent today to get a quote and request more information.

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