Filing A Life Insurance Claim

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TL/DR

It usually takes insurers 2 weeks to 2 months to process a claim.

Life insurance claims are only delayed or rejected in rare circumstances.

You can choose to get the death benefit in a lump sum or annuity installments.

You need policy information, proof of death, and personal ID to file a claim.

In Depth

A policyholder can ease some of the financial stress of losing a loved one by asking an insurance company to pay for covered items and property as soon as possible.

All you have to do is get a few papers together and call the insurance company.

Here are 4 easy steps to follow when filing a death claim, how to get ready for possible problems, and how to find out if you're the beneficiary of a life insurance policy.

1. Collect important documents

Having your documents in order can speed up the process of making a claim. You only need three things to get the death benefit from a policy, which is good news.

Death certificate with a seal Fraud can be stopped with certified proof of death. Most of the time, you won't have to file for a certificate on your own. You will have to ask for a copy from the person who made it, which is usually the funeral home or doctor who confirmed the time and place of death. You can also ask your local vital records office for a copy in person, by phone, or online.

Policy document The policy document has information about the life insurance policy, such as the policy number, the amount of the death benefit, and the names of the people who will get the money. The insurance company checks the information on your policy against its own records to make sure you're making a claim on the right policy. If you can't find the policy document, try calling the insurance company or getting in touch with the person who handled the deceased person's finances.

Claim Form This form, which is also called a "request for benefits," is where you put information about the policyholder, such as their policy number and the reason they died. You'll also need to tell the insurance company how you're related to the policyholder and how you want to be paid once your claim has been processed.

2. Give the insurance company a call

Once you have all the necessary paperwork, you'll need to contact the insurance company that gave you the life insurance policy to let them know about the death and file your claim.

How much time do I have to make a claim?

There is no limit on how long you have to file a claim. You can get a death benefit at any time after a loved one dies, as long as their policy was still in effect at the time of their death. But if you file a claim right away, you'll get paid faster.

TIP:  For YOUR policy, make sure there's no confusion by telling your beneficiaries you've chosen them.

3. Wait until the claim is handled.

After you take care of things on your end, the insurance company will do a few basic checks. First, the insurance company will check to see if the policy is still in effect. If the policyholder stops paying the premiums or if the coverage term ends, the policy is no longer valid.

Then, a representative will confirm that you are the recipient.

Beneficiary: The person or group named in the policy to get the money from the death benefit. You might be asked to show your driver's license, Social Security card, or birth certificate as proof of who you are. If you are not a citizen of the United States, you may have to fill out more paperwork.

Depending on how long it takes to process a claim, the insurance company may pay out a death benefit within a few days or it may take up to 60 days. Insurers have a reason to pay out as soon as they can so they don't have to pay interest on death benefits that haven't been paid. Find out from your insurance company what its deadline is, since each state has its own rules.

4. Receive benefit funds

You can get the death benefit in a few different ways, depending on the life insurance company and the plan. A lump sum and an annuity are the easiest and most common choices:

Lump sum You'll get the whole death benefit all at once, and you can start using it right away to pay for a funeral, your mortgage, and other costs. You won't have to pay any taxes on it either.

Annuity An annuity is a savings account where the death benefit is invested and then paid back in a set number of annual payments starting at a future date. You pay taxes on investment gains.

How do I know the beneficiaries of a policy?

The death benefit from life insurance doesn't come out of thin air. Beneficiaries must file a death claim to get the payout, so you should talk to your loved ones to find out if you are named as a beneficiary. You should also make sure YOUR beneficiaries know about any policies you have.

Even though it's possible to find a lost life insurance policy, you don't want to deal with it when you're sad about the death of a loved one.

To get ready for the process of claiming the death benefit, make sure you have the following information about the policy:

• The full name of the policy holder (to locate the policy)
• The name of the insurer
• The number of the plan
• How to reach the insurance company
• A copy of the policy, if possible

What happens if there are no living beneficiaries?

If all of your beneficiaries die before you do and there isn't a named beneficiary who can claim the life insurance proceeds, the death benefit may go into a trust that is used to pay off any debts owed by the decedent's estate. To avoid this, you should always name a back-up beneficiary or multiple beneficiaries and make sure your policy is up-to-date after every big change in your life.

What if a claim is rejected?

In rare cases, a claim will be denied and the policy will end because of it. When this happens, the insurance company pays back the premiums paid by the beneficiary or the estate of the person who died, but they don't pay the death benefit. Claims for life insurance could be turned down because:

Contestability: A policy's contestability period lasts for two years after it goes into effect. During this time, the insurer can deny claims if the applicant gave false information when they signed up for the policy.

Policy lapse: A claim can't be made on a policy whose coverage has ended because of missed payments.

Suicide: Policies have a clause that says if the insured person commits suicide within the first two years of buying the policy, the death benefit will not be paid out.

Homicide: If the person who died was killed, the insurance company will wait to pay the death benefit until any beneficiaries are found to have done nothing wrong.

It's not as hard as it sounds to file a claim on a life insurance policy, but it can be hard when a loved one has died. We've put together a guide to help grieving beneficiaries with the claims process for death benefits. You can also talk to a financial advisor to get all your questions about life insurance answered and learn more about how it works.

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