Life insurance pays a death benefit to the stated beneficiary at the death of the insured. When the insured dies, the beneficiary of the policy files an insurance claim.ife Income. 1  Example: $100,000 death benefit-beneficiary (a 54-year-old male) elects the life income option. 2  Based on his life expectancy, the insurance company promises to pay the beneficiary $6,250 per year for life.