If you are a life insurance beneficiary, you may expect a check to appear in the mail when the insured person dies. Unfortunately, insurance firms aren’t necessarily required to notify you if you’re a beneficiary. This means you must be proactive to receive your payment.
The American Council of Life Insurers reports that life insurance firms in the United States paid out $92 billion to beneficiaries in 2022.
Here’s how to make a life insurance claim and receive the money your loved one left for you.
How to claim life insurance money
- Find the name of your life insurance company. To file a claim, you do not need to have the policy or the life insurance policy number. If you know the firm name, we can seek the policy number for you. The agent who sold the insurance, or your loved one’s financial planner, may also be able to direct you to the firm or policy.
- Obtain a certified copy of the death certificate. When submitting your claim, you will be required to provide the death certificate. Request a copy from your local vital records office or funeral home. Proof of death aids in the prevention of life insurance fraud and ensures that rewards are made to the intended recipients.
- Gather any supporting documentation. If your loved one died in an accident, you may need to provide a copy of the autopsy, toxicology, or police report.
- Fill out the company’s claim forms. Many life insurance companies offer online claims forms. With other insurers, you must phone to begin the claims procedure or receive a claims packet via mail. It is critical that you fill out the papers completely and truthfully.
- Send in the documents. Claim forms normally ask for basic information such as your full name, address, date of birth, and Social Security number. You will also need to define your relationship with the policyholder and how you want to be reimbursed.
- Wait for the money. Insurers typically pay out life insurance claims within days or weeks of receiving the paperwork. In other situations, the payout may be delayed, such as if the person died within two years after obtaining the policy. This is referred to as the “contestability period,” and it effectively grants insurers the right to investigate the claim.
Ways to receive the money
There are two basic ways to get life insurance death benefits, which are the funds payable from a life insurance claim:
In a lump sum. You can request a check for the whole amount. The insurer may also provide you with a draft account, often known as a “retained asset account”. Similar to a bank account, you can withdraw money at any time and in any quantity until the account is cleared. Life insurance benefits are often not considered taxable income.
In installments over time. The insurance will hold the money and may offer you any of the following options, with details varied by firm.
- Interest payments. The insurance will pay you regular interest on the sum. When you die, the principal may be transferred to your estate. Check the insurer’s policies to see if you can also withdraw from the primary.
- Fixed period. The insurer makes regular payments on the principle and interest over a set period of time.
- Fixed amount. The insurance pays out a certain sum at regular periods until the payout and interest are depleted.
- Lifetime income. The payoff is transformed into an annuity that will make regular payments for the rest of your life.
Don’t forget to claim other life insurance policies
If the deceased was retired or still employed, they may have obtained group or supplemental life insurance via their employer. In this situation, if the employer discovers that a worker has died, the benefits department will most likely notify any beneficiaries.
Spouses, previous spouses, and minor or disabled children of a deceased individual may also be eligible for Social Security survivor benefits.
