Talking about a life insurance policy can be a little awkward. Maybe you’re trying to figure out how much coverage you need, or if you or your spouse should get a policy. But it’s an important conversation to have – especially if you’re a listed beneficiary on someone’s policy. While it can be morbid to think about having to actually file a life insurance claim, you should know how to, so you can avoid any frustrating delays. Billions of dollars are left unclaimed by life insurance beneficiaries because people are unaware of policies or don’t know that they’re beneficiaries. Having the right information and the right documents available will help keep the process as simple as possible.
What Do You Need to File a Claim?
There are a few documents to have and steps to take before you can start the process of filing a life insurance death claim.
Make sure you know your beneficiary status. In order to file a life insurance claim and receive the policy benefit, you have to be a beneficiary of the policy. Your loved one who has the policy has to make that decision in advance, for you to be listed.
Know the who the insurance provider is and the policy number. This is pretty straightforward, but you’ll need to know the right insurance provider to contact and what the policy number to reference is. Having this information up front will help cut down the time spent calling different insurance companies or trying to figure out the policy number. If you can’t find the insurance provider—perhaps they rebranded or combined with another company—call your state’s Department of Insurance for information.
Talk to an agent to answer any initial questions you have. Once you know the insurance provider, you may want to call before making the claim to ask an agent how to best prepare the documentation needed. You may also want to ask about what the company’s process looks like, and who the right person to talk to is who can help you.
Have a copy of the death certificate from the funeral home. It’s a good idea to have a few copies of several different documents – like a death certificate or closed bank account – because a variety of claims will require these.
How Do You File a Claim?
Step 1: Prepare the documents
Now that you know which documents you need, get them organized and readily available for when you contact the insurance provider to make the claim.
Step 2: Contact an Agent/Producer
You’ll want to first contact the policy’s agent/broker to discuss documents and information needed to file a claim. However, now you’ll want to ask:
- If you need to submit a death claim form along with the death certificate
- If there are any other forms necessary to fill out
- Where to send these forms when they’re completed, or if the company requires you to submit the claim online
- What the claim payment options are (including payment frequency, amounts and timing)
If you’re having a hard time with the passing of your loved one and are having difficulty getting the paperwork sorted, ask the insurance agent to help you.
Step 3: Submit required information and documentation
Once you’ve submitted all of the required information and documentation to the insurance provider, it may take some time for them to review everything. Make sure to ask for a timeline when speaking with an agent. That way, you have a clear understanding of when you’ll hear back about your claim.
How Do You Know if a Claim Will Go Through?
There are terms and conditions for a life insurance claim to be approved. First and foremost, the policy holder’s death must occur while the policy is still in force. The cause of death matters, too, as some policies have specific terms around what’s covered. Most life insurance policies won’t provide the payout in cases of suicide within the first two years of the policy.
How Do the Payments Work?
There are typically two different ways to receive a life insurance death claim: through a lump sum payment or through installments over time. Make sure to ask the insurance provider in your initial conversation about payment options available.
Lump sum payment: The insurance provider will issue you a check or they may offer you a draft account. Similar to a checking account, a draft account allows you to withdraw money from it until the funds are gone.
Installments: The insurance provider may hold onto the funds and distribute them to you over time. It depends on the company, but there are typically a few different options for installment plans. You may be able to convert the payout into an annuity that provides regular payments for the rest of your life. Or, you may be able to set a fixed amount that’s distributed at regular intervals until the policy payout amount is gone.
You also want to keep in mind whether your loved one may have had more than one policy in their name. For example, many employers offer group life insurance policies as an extra benefit. If your loved one was working before they passed, check with their employer’s Human Resources department to see whether there’s a policy in place, and what next steps you need to take if there is.
Knowing how to file a death claim for a life insurance policy is important. Hopefully, you’ll never have to do it. However, should the time come, the last thing you’ll want is to get caught up in frustrating processes with an insurance provider. If you’ve just started having the conversation about which life insurance policy is best for you or your loved one, learn about the differences between Term and Whole Life Insurance.
Caroline Gillard is a PR Specialist and a current board member of Women in Listed Derivatives (WILD). WILD is a non-profit organization that’s mission is to promote networking and relationship-building among women in the listed and over-the-counter derivatives industry through social and educational events.