Upon the death of the policyholder, the beneficiary should contact the insurance agent, who will help file the claim. How the beneficiary collects the proceeds depends on his or her individual circumstances. The proceeds may be paid in a lump sum, paid in fixed installment payments, or turned into an annuity. An annuity pays an income from a death benefit for a specific number of years or for life. The survivor can also leave the money with the insurance company and receive the annual interest the death benefit earns. The policyholder can choose the settlement option before death or can leave the decision to the beneficiary.