If you're a life insurance policy beneficiary, you must file a claim when the time comes to collect the death benefit. Life insurance companies insure a broad network of individuals and are not automatically notified when a policyholder dies. As a result, the beneficiary has to take action. The claims process involves correspondence with the life insurance company, and you will get the death benefit after following a few easy steps covered in this article.
Beneficiaries can file life insurance claims. If you need clarification on whether you're a beneficiary, you can find out through the insured's documents or from that individual's lawyer, accountant, or other professional who has that individual's personal information.
Filing a claim requires obtaining the policyholder's death certificate and contacting the company that issued the policy. The insurance company needs proof that the insured has passed away.
While the death benefit is commonly disbursed as a lump sum, beneficiaries can choose to receive the death benefit as a series of partial payments instead of getting the entire death benefit at once.
A life insurance policy claim can be rejected if the policy has expired or if the policyholder violated the terms of the life insurance policy.
Claiming life insurance
When an insured dies, the beneficiary should contact the insurer for a claim form and instructions for filing the claim. The insurer will need a certified copy of the death certificate, which can be obtained from the funeral director or the vital record department of your local municipality. When all required documents are submitted, the insurance company will review the claim and notify the beneficiary of a decision to either disburse the funds or deny it. Many states allow the insurer 30 days to render a decision and notification of a denial must be in writing.
Sometimes, there can be more than one beneficiary, which requires each to complete paperwork. Each beneficiary will receive the amount assigned by the policyholder.
How to know if you're a beneficiary
It's common for policyholders to inform their beneficiaries they are listed on the policy. If not, the insurance company will contact the beneficiaries at their last-known address. If the deceased left a will, insurance information is typically included.
There are ways to find out if someone has life insurance other than being told directly. You may encounter such information while closing the deceased individual's accounts with various services, which will require sorting through mail to know which services need to be canceled. For example, during this process, you may find life insurance premium payments on the deceased individual's bank statements or discover a letter from the insurance company addressed to the policyholder. From there, you can contact the life insurance company, gather more information, and proceed with the claims process.
If you cannot find anything related to life insurance in the individual's documents, you can also contact their banker, lawyer, financial advisor, or other professional who has access to the decedent's files.
How to file a life insurance claim
The first step in filing a life insurance claim is to contact the insurer and ask what's needed to proceed. You'll need a certified copy of the death certificate; some insurance companies may require more than one copy. A funeral director can provide copies, or you can obtain them from your local municipal office. Typically, certified copies require a fee.
The insurance company will provide forms to be filled out and returned with the proof of death. You may be asked for identification. Many insurers expect you to submit a copy of the policy, so if you're aware of being named a beneficiary, ensure you know where the policy is kept. The company can provide a copy, but the process will move quicker if you have it on hand.
You'll also need to select how you want to receive the payment. The insurer will provide the available options.
Contact the insurance company that issued the policyholder's life insurance policy
Insurance companies cannot know a policyholder has died unless contacted by someone aware of the policy. Missing multiple payments can lead to policy cancellation. For this reason, you should let the insurance company know about the insured's death as soon as possible.
Get the death certificate
In some cases, more than one copy will be needed. You can get a death certificate from the funeral director of where the insured's funeral service was held or from your local municipal office. Some funeral directors will provide the original death certificate at no charge, and some may give the original death certificate plus an extra copy or two at no cost.
To obtain a copy of the decedent's death certificate, you will need to
show proof you are the estate executor or the next of kin. In most
states, death certificates are available only to immediate family
members, and some jurisdictions may require additional information such
as the deceased's social security number and last known address.
Fill out paperwork
The insurer will send you paperwork for you to complete and send along with the death certificate. Here, you'll provide information about yourself and the policyholder. This is also where you choose how you'd like for the company to pay you.
Choose your payment method
Many opt to receive the death benefit as a single tax-free lump-sum payment where all the funds are paid out at once, but life insurance companies offer payment alternatives for those who'd like to be paid in increments. These options include:
Life income. The insurance company pays you a fraction of the death benefit on a fixed schedule for the rest of your life. Life income is a continuous, passive, tax-free income to supplement your primary income.
Fixed amount. Instead of a lifetime, you'll receive payments in intervals until there are no funds left for the company to disburse.
Fixed period. This method is similar to the fixed amount method, but the disbursement is set to end at a specific date.
Interest payments. Instead of receiving the death benefit, you'll only receive the interest on the death benefit. The principal amount of the death benefit would go to a contingent (also known as a secondary) beneficiary.
What to expect after filing a claim
Once you've submitted the necessary paperwork and selected
how you'd like to be paid, you can expect the company to issue a
payment within one to two months. The time it takes to issue a payment can vary depending on the circumstances.
Causes of rejected claims
An insurance company has a specified time to review a claim, typically 30 days. The claim will be accepted or rejected, and the beneficiary will notice the decision in writing. Claims can be rejected for various reasons, often for breach of contract.
Some reasons for policy invalidation include:
The insured died during the commission of a crime. If the policyholder's death occurred during an event such as a burglary or a car accident while trying to flee the crime scene, the insurance company will not issue a death benefit.
False information. Lying on a life insurance application will result in the cancellation of the policy.
Not notifying the insurance company of life-changing events. It's best to notify your insurer of any major life event, such as marriage, having children, or moving to a new address. Otherwise, that could cause problems when your beneficiary files a claim.
Murder or suicide. If the beneficiary takes the policyholder's life, they will no longer be entitled to the death benefit. In many instances, a life insurance company won't issue a death benefit if the policyholder commits suicide within the first few years of enrolling.
If the decedent was honest with the life insurance company, kept the policy active, and was clear about who they wanted to designate as a beneficiary, filing a life insurance claim would be a relatively straightforward process. But this process is always easier when the beneficiary takes prompt action following the insured individual's death. Generally, most payouts are made within 30 to 60 days, but it can take longer than 60 days if the company determines there are possible grounds to deny the claim. If the policyholder dies within the first few years of having the policy, a payout may be delayed because the insurer can take longer to investigate and pay a claim.
What items are required for a life insurance claim?
You'll need a certified copy of the death certificate and paperwork to file a claim. The death certificate proves the insured has passed away, and the paperwork will have information about you and the decedent.
Is it easy to claim life insurance?
In most cases, yes. If you're a beneficiary, you can go through the claims process without hiring someone to do it on your behalf. Assistance is always readily available if you encounter any difficulties, whether from the insurance company or an agency.
How long does it take to get life insurance money?
It usually takes 30 to 60 days to get life insurance money after filing a claim. The time it takes to get the full amount will depend on your preferred payment method. If you opt for a lump sum, you get immediate access to the entirety. If you want incremental payments, it'll take longer to receive the full death benefit.
Why would a life insurance claim be denied?
Claims are usually denied because of something the policyholder did. This could be lying on the application (e.g., failing to disclose dangerous hobbies or habits), passing away during the waiting period, or not paying premiums. If it's a term policy, the policyholder may have let the term expire instead of renewing it.
- Insurance Information Institute. Tips for finding a lost life insurance policy.
- Insurance Information Institute. Unclaimed life insurance benefits.
- Life Insurance. How to Make a Life Insurance Claim.
- Insurance Information Institute. How do I file a life insurance claim?
- Fidelity. 9 Reasons life insurance won't pay out.
Show all references
- National Association of Insurance Commissioners. Locating the Company that Services Your Life Insurance Policy.
- USA.gov. How to get a certified copy of a death certificate.