How to file a life insurance claim

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BY: ANDREW STEWART 

A death in the family can be sudden or follow a long illness, there are unexpected expenses and the challenge of trying to keep a family together after the loss of a breadwinner. Life insurance is intended to help bridge any financial gaps and help ease that burden. Buying a life insurance policy is like buying a safety net for your family. You won’t be able to provide for them, so you buy a policy. But for it to be effective you must understand how and when life insurance payouts are delivered to beneficiaries. This includes understanding how quickly benefits will be paid.

How to file a life insurance claim

Filing a life insurance claim is actually a simple process. To start, you should try to track down the insurance policy that covered the person who passed away. There are three types of insurance policies that are purchased by individuals. One type of policy is term life. This is the most economical type life insurance. The benefits are fixed for a set time, usually between 10 and 30 years. When you find the policy documents, verify that the policy has not expired and that it is still valid. The other types are universal and whole life insurance. This type of insurance has a fixed or flexible benefit and may have accrued interest or dividends.

Typically, there are only a few things you need in order to file a claim on a life insurance policy.

  • A certified copy of the insured’s death certificate. You can get these from the insured’s funeral director.
  • The carrier’s official claim form. You can often complete these online through the carrier’s website, though some carriers will need you to print the form out and file a hard copy by mail.
  • A copy of the insurance policy. It helps to speed up the process of filing a claim if you can provide the policy number and your beneficiary information.

Most insurance companies pay within 30 to 60 days of the date of the claim. There is no set time frame but insurance companies are motivated to pay as soon as possible, after receiving bona fide proof of death if it is outside the contestability period. The life insurance contestability period is a short window in which insurance companies can investigate and deny claims. The period is two years and it begins as soon as a policy goes into effect. If you die within the contestability period, the life insurance company can investigate whether you gave accurate information on your life insurance application.

To get started, either the agent or the beneficiary of the policy should get in touch with the carrier and provide the date and cause of death. Then, the carrier will send you a claims packet either via physical mail or email.  Additional steps that you should take would be to contact the employer of the deceased. Many employer-based, group-insurance plans have a life insurance benefit. Contact the employer’s human resources department to ask about any life insurance in effect, and, if necessary, get a copy of the policy and the claim procedure. Check for other types of death-benefit policies. Although non-traditional life insurance, some of the deceased’s accounts may have a death benefit. The most common are a mortgage, credit card, and auto-loan benefits that pay off debt upon the death of an account holder. Taking the time to research these benefits could preserve a house or other valuable assets.

What could delay payouts

Another scenario that could delay payment, not surprisingly, is when “homicide” or “suicide” is listed as the cause of death on the death certificate. In this case, a claims representative may communicate with the detective assigned to the case to rule out the beneficiary as a suspect. Evaluate your payment options. Depending on the type of policy and amount of the death benefit, you may have several options for receiving the payout. For substantial payouts consider consulting with an investment adviser to maximize your benefits.

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