How Does A Life Insurance Payout Work? 
When the beneficiary receives a life insurance payout , the insurance company will work with them to help make the payout most beneficial for their situation . If there is a mortgage to pay off , taking the payout in a lump sum may work best . If the beneficiary needs the life insurance proceeds for income , taking the death benefit in monthly installments may work better . The life insurance company pays interest to the beneficiary on money left in the policy until it is taken out . 