When Do Life Insurance Policies Pay Out? 
Well , the obvious answer is `` when the insured dies '' . However , life insurance companies have begun offering living benefits from their products . Many allow an insured who has been diagnosed with a terminal illness to use their death benefit during their lifetime . This allows the insured and their family to use that money to help with medical bills , final expense planning , and any other reason . The insurance company knows that they 're eventually going to pay the death benefit and allowing the insured to use it during their life helps their family . I 'm assuming the question is regarding the death benefit and not the cash value of a life insurance policy . The cash value is available anytime through withdrawals , loans , or structured payouts . Keep in mind that these will impact the death benefit by either reducing it or eliminating it altogether . be sure to consult with an agent you can trust and explore all your options before making a decision that will impact the death benefit . 