In what forms can the death proceeds of a life insurance policy be paid?

The death proceeds of a life insurance policy are typically paid out in the form of a lump sum payment to the designated beneficiary upon the death of the insured. This option is the most common and straightforward way for beneficiaries to receive the funds, allowing them immediate access to the money for expenses such as funeral costs, settling debts, or other financial needs that may arise after the insured's passing.

In contrast, while dividends may be available through certain types of life insurance policies, they do not represent the death benefit itself. Policy loans pertain to borrowing against the cash value of a permanent policy, rather than being paid out as death benefits. The annual renewable premium refers to a type of insurance policy structure and does not relate to how the death benefit is disbursed. Therefore, the lump sum payment stands out as the primary and preferred method for the distribution of death proceeds from life insurance policies.