What term describes the payment of policy proceeds immediately upon the insured's death?

The term that describes the payment of policy proceeds immediately upon the insured's death is known as a lump sum. When the insured passes away, the life insurance policy provides the beneficiaries with the total face value of the policy in a single payment. This immediate payment allows beneficiaries to access the funds without delay, which can be critical for covering expenses such as funeral costs, debts, and ongoing living expenses.

In contrast to a lump sum, other options indicate different scenarios. For example, termination payout typically refers to the payment made when a policy is canceled before death, rather than upon the insured's passing. An advance death benefit may involve receiving a portion of the death benefit while the insured is still alive, often in cases of terminal illness. Deferred payout suggests that the benefits would be distributed at a later time rather than immediately, which is not the case with a lump sum payment. Thus, lump sum is the appropriate term for the immediate transfer of funds following the insured's death.