How does a life insurance beneficiary file a claim?

Filing a life insurance claim is straightforward and easy if you’re prepared.

Reina-Marszalek 1600Rebecca Shoenthal author photo

Reina Marszalek & Rebecca Shoenthal

Published July 20, 2020

KEY TAKEAWAYS

  • You’ll need a death certificate, policy document, and claim form to file

  • The cause of death may cause a claim to be delayed or rejected

  • You can receive a death benefit in the form of a lump sum or annuity

Losing a loved one is never easy, but falling into financial hardship can make a loss even more difficult. Filing a life insurance claim can take at least one worry off of your mind, and ensures that the policyholder’s premium payments over the years don’t go to waste.

The good news is that claiming a life insurance policy is pretty basic once you know what you need to do, and that’s exactly what we’re here to teach you. Read on to learn the five easy steps you need to follow when filing a claim:

IN THIS ARTICLE

Step 1: Gather important documents

After the death of a loved one, it can be difficult to find the energy or focus to do anything—let alone gather up all the paperwork needed for a life insurance claim. But having your paperwork in order can help expedite the process so you can get paid sooner. Luckily there are just three documents you’ll need to claim a policy’s death benefit.

1. Death certificate: The insurer will need a certified copy of the policyholder’s death certificate. This proof of death ensures that policies are being claimed legitimately and helps prevent fraud. - In most cases, you won’t need to file for a death certificate yourself. Rather, you’ll need to request a copy from whoever prepared it: usually the funeral home or medical professional who confirmed the time and place of death. You can also request a copy of the death certificate directly from your local vital records office by phone, in person, or even online.

2. Policy document: The policy document has all of the pertinent information about the life insurance policy: the term, the death benefit amount, policyholder details, and so on. - The insurer will cross-reference this with their records to make sure you’re making a claim on the correct policy. If you’re having trouble locating the life insurance policy document, you can try contacting the insurance company directly, searching your loved one’s physical and digital files, or reaching out to their financial advisor for more information. - If you don’t even know the name of the insurance company, you could try using the National Association of Insurance Commissioners’ Life Insurance Policy Locator Service to search for the policyholder’s name. This should be a last resort, because it can add up to 90 business days to the claims process.

3. Claim form: Also known as a "request for benefits," this is where you fill out the information about the policyholder, including their policy number and cause of death. - You’ll also indicate your relationship to the policyholder and how you would like to be paid once the carrier finishes processing your claim. The insurance company will send the form, along with the death certificate and policy document, back to the insurer, and they’ll take it from there.

Step 2: Contact the insurance company

Once you’ve rounded up all your documents, you’ll need to get in touch with the insurance company that issued the life insurance policy to notify them of the death so that they can pay out the death benefit. As with many things, being prepared beforehand will make the process much smoother and prevent delays in receiving financial support.

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Limit confusion by letting your beneficiaries know you've named them.

- Patrick Hanzel, Advanced Planning Specialist and Certified Financial Planner

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Step 3: Wait for the claim to be processed

Once you take care of things on your end, the insurance company will perform a few basic checks. They’ll make sure that you are, in fact, the beneficiary assigned to the policy so that they aren’t paying out to the wrong person. During the underwriting process, insurance companies require the policyholder to provide the name, address, social security number and date of birth for any beneficiaries named on the policy. You may be asked to provide proof of identity — such as a driver’s license, social security card or birth certificate — to verify your identity during the claim process.

They’ll also make sure the policy in question is still in force, or active; you can only make a claim on a policy that’s currently in force. Policies lapse if the policyholder stopped paying premiums or if it’s a term policy for say, 30 years, and that time period has passed.

Depending on how long it takes to process a claim, the insurer may pay out a death benefit within a few days, but it can take as long as 30 to 60 days. Fortunately, insurers are incentivized to pay out as quickly as they can to avoid interest charges on unpaid death benefits. Check with your individual insurance company to find out what their deadline is, as each state has its own statutes. New York might have a faster processing time than Florida, for example, so it’s worth investigating.

How long do I have to file a claim?

There is no time limit when it comes to filing a claim. You’re in your rights to collect a death benefit at any time after your loved one has passed, provided that their policy was active at the time of death.

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Step 4: Receive the death benefit

Depending on the insurer and the plan, there are a few different ways you can choose to receive the death benefit. The two simplest and most popular options are lump sums or annuities.

Lump sum

With a lump-sum payment, you’ll get the entire death benefit at once. This means you won’t have to worry about finding other ways to pay for the funeral, a mortgage, and so on. Not only will you receive the full death benefit; you also won’t have to pay taxes on it.

You should be able to choose how it’s delivered to you when you fill out the claim form. Direct deposit may be an option, or you may be able to receive a check.

Annuity

The designated beneficiary may be allowed to convert the death benefit into an annuity instead of receiving it as a lump sum. An annuity is a financial instrument where your initial payment – the death benefit – is invested, then paid back to you as an annual payment for a predetermined number of years, beginning from an annuitization date in the future.

The combined annuity payments could be considerably higher than your initial investment, but if you die before receiving all the payments then you may collect less than if you’d just taken the lump sum from the start.

Step 5: Lay out your final wishes

After your beneficiaries receive the death benefit payout, they’ll likely take on your financial responsibilities. And while the death benefit will protect them from financial duress, there is still the new stress of navigating an entirely new financial reality while already grieving the loss of someone they love.

Laying out your final wishes — anything from your funeral arrangements to how you’d like the death benefit to be utilized — can alleviate some of the difficult decisions your loved ones will have to make when you die.

If you’re able to work with a financial advisor to help map out a financial plan for your beneficiaries, all the better. Leaving a written plan of their expenses and what the death benefit should go towards, such as college tuition or bills, can make all the difference in their financial security and will ensure that the death benefit is being utilized as you intended, to protect the ones you love.

Special considerations when filing a claim

How do I know if I am a beneficiary?

The life insurance death benefit isn’t paid out automatically. Beneficiaries will need to file a death claim to receive the payout, which is why it is important that you talk to your loved ones to find out if you’re named as a beneficiary, especially if they are of advanced age or poor health. Patrick Hanzel, Policygenius’ Advanced Planning Specialist and Certified Planner tells his clients, “It's a good idea to make sure your beneficiaries are aware of any policies you have in place. This can help limit confusion (or risk of unpaid benefits) when a claim needs to be made during an already difficult time."

There are a lot of life insurance companies out there — and simply knowing you’re the beneficiary of a policy isn’t enough. To file the death benefit claim, you’ll need to know who the policyholder bought a policy from. While it’s completely possible to find a life insurance policy lost in the abyss, it’s extra stress you don’t want to take on when grieving the loss of a loved one.

To be best equipped for the death benefit claims process, ask for the following policy information:

  • The policyholder’s full name (to locate the policy)
  • The insurer’s name
  • The policy number
  • The insurer’s contact information for death benefit claims
  • If possible, a copy of the policy

What happens if all the beneficiaries are dead?

If all your of your beneficiaries die before you 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. For this reason, you should always list a contingent beneficiary and update your policy with every big life event.

Why was my claim rejected?

Although insurers usually pay out claims, in some cases filing a claim will result in the rejection of the claim and termination of the policy. When that happens, the insurer will typically reimburse the premiums paid to the beneficiary or the deceased’s estate, but the death benefit will not be paid.

Contestability

Most life insurance policies have what is called a contestability period. This typically lasts two years from when the policy goes into effect and exists to protect the insurance company from misrepresentation. It allows the insurer to make sure the information provided to them during the application process is true and wasn’t misrepresented in favor of the policyholder.

If you never told the life insurance company that you were a skydiver when you applied for a policy, and you later die in a skydiving accident, the insurer may contest your beneficiary’s claim. Additionally, if you told your insurance company that you don’t skydive even though you do, and then you die in a non-related way, like a car accident, they can still reject your beneficiary’s claim if they find out you lied because misrepresentation on an application breaks the contract. Claims will only be contested in the first two years of the policy. Ater the contestability period ends, your policy becomes incontestable.

To get paid as soon as possible, Hanzel recommends starting early: “If you know you are the beneficiary of a life insurance policy, you should contact the agent on the policy or insurance company directly as soon as possible. Most claims will be paid within 1 or 2 months, but this could take longer in the event any investigation is needed, such as if the insured is believed to have misrepresented information on their application. Because of this, it's best to get the process started early."

Suicide clause

Insurance policies will also have a suicide clause that states that a death benefit will not be paid out if the decedent commits suicide within the first two years of purchasing the policy.

Homicide

If the deceased was killed, the insurance company will wait until any beneficiaries are cleared of wrongdoing before paying the death benefit.

The bottom line

Filing a life insurance claim isn’t as complicated as it sounds, but can be difficult to do when you’re mourning the loss of a loved one. Once you gather up three important documents and contact the insurance company, all you have to do from there is wait for the claim to process. Once your claim is processed by the insurer, you can choose how you’d like to receive the money.

We’ve compiled a resource for grieving beneficiaries to aid in the death benefit claims process that might be worthwhile to bookmark if you need it in the future.

About the authors

Insurance Expert

Reina Marszalek

Insurance Expert

Reina Marszalek is a managing editor and writer based in New Jersey. Previously, she was the senior editor at DoctorOz.com, answering today's biggest health questions and discovering the latest trends in food and health.

Insurance Expert

Rebecca Shoenthal

Insurance Expert

Rebecca Shoenthal is an insurance editor at Policygenius in New York City. Previously, she worked as a nonfiction book editor. She has a B.A. in Media and Journalism from the University of North Carolina at Chapel Hill.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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