Insurance Proceeds

DEFINITION of 'Insurance Proceeds'

The benefit proceeds paid out by any type of insurance policy as a result of a claim. Insurance proceeds are paid out once a claim has been verified, and financially indemnify the insured for a loss that is covered under the policy. Insurance proceeds are sometimes paid directly to a care provider (as with health insurance), but usually are sent to the insured in the form of a check.

BREAKING DOWN 'Insurance Proceeds'

Insurance proceeds are tax-free in most cases, regardless of the type of insurance or policy. One exception is disability insurance, which is taxable to the insured as income if the insured used pretax income to pay premiums. Another is when a homeowner receives insurance proceeds for a damaged or destroyed home that exceed the property's adjusted basis. In this case, the profit is taxed as a capital gain unless a replacement property is purchased within the specified period of time.

RELATED TERMS
  1. Personal Lines Insurance

    Property and casualty insurance products for individuals that ...
  2. Insurance Industry ETF

    A sector-following fund that invests primarily in insurance companies, ...
  3. Cover Note

    A temporary document issued by an insurance company that provides ...
  4. Insurance Premium

    The amount of money that an individual or business must pay for ...
  5. Broad Form Insurance

    Insurance coverage that extends beyond the basics to include ...
  6. Insurance Claim

    A formal request to an insurance company asking for a payment ...
Related Articles
  1. Personal Finance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own.
  2. Personal Finance

    What Happens If Your Insurance Company Goes Bankrupt?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.
  3. Personal Finance

    Bundle Your Insurance For Big Savings

    Bundling your insurance can save you money and time. Read on to see how get the most out of multiline insurance discounts.
  4. Personal Finance

    Exploring Advanced Insurance Contract Fundamentals

    Understanding your contract can help you protect our family's financial security.
  5. Personal Finance

    Explaining Insurance

    Insurance is a form of contract between an individual and an insurance company that spreads risk in exchange for premium payments.
  6. Personal Finance

    The History Of Insurance In America

    Insurance was a latecomer to the American landscape, largely due to the country's unknown risks.
  7. Personal Finance

    How to Protect Your Income No Matter What

    What does it mean to insure your income? Here are a variety of ways to do it and some insights into when it might make sense to invest in income insurance.
  8. Personal Finance

    How Much Life Insurance Should You Carry?

    Learn how much - if any - insurance you really need.
  9. Personal Finance

    Getting Life Insurance in Your 20s Pays Off

    Find out how Americans in their 20s can benefit from a well-thought-out life insurance policy, especially if they are able to build cash value for retirement.
  10. Personal Finance

    Insurance Coverage: A Business Necessity

    Don't go to work without this policy in place - especially if your work is in your home.
RELATED FAQS
  1. What is the average return on total revenue for the insurance sector?

    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
  2. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
  3. What are some examples of industries that practice price discrimination?

    Understand the various types of insurance coverage offered in the insurance marketplace, and learn why each policy should ... Read Answer >>
  4. What is term insurance?

    Term insurance is a type of life insurance policy that provides coverage for a certain period of time, or a specified "term" ... Read Answer >>
  5. What is the difference between the death benefit and cash value of an insurance policy?

    Understand the difference between the various components of a life insurance policy including the death benefit and a policy's ... Read Answer >>
  6. What are examples of the largest companies in the insurance sector?

    Read about some of the largest and most influential companies in the insurance sector, a list that includes Berkshire Hathaway ... Read Answer >>
Trading Center