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Thinking about money when a loved one dies is difficult, but life insurance is taken out to protect the people left behind. In a way, collecting the benefit is a part of carrying out their wishes. And if you’re a beneficiary, getting in touch with the insurance company may be all it takes to get started.
Claiming a benefit is relatively straightforward. Follow these steps to make your claim:
The life insurance company can legally reject your claim in the following scenarios:
If the life insurance coverage was purchased through an employer, a disabled employee may be told they don’t need to pay life insurance premiums while on disability.
If their employer fails to submit all necessary documents to the insurance company for the waiver of premium, it’ll result in the coverage being terminated without their knowledge. And if they die without reinstating the policy you won’t receive the death benefit.
Policyholders should consider these four ways to better the chances of a benefit being paid:
The most straightforward way to determine your beneficiary status is to ask the policyholder while they are still living.
But according to a report from USA Today, there are billions of dollars of life insurance benefits that have never been paid. If the suspected policyholder has died, these steps can help you determine if one of those payouts might be yours. You’ll need the full legal name of the deceased on hand, as well as their Social Security number and address.
The primary beneficiary is the first person chosen to receive the benefit payout. If the primary beneficiary can’t or won’t accept the payout, it goes to the secondary — or contingent — beneficiary.
Generally, insurers have 30 to 60 days to review a claim and pay it. Some states have laws in place to regulate this, and insurance companies can even face the threat of accumulating interest if they take too long. It could take longer if your life insurer has to investigate the claim, such as if fraud is inspected.
You may receive a lump sum all at once, but it depends on which payout method the policyholder chose. Sometimes, the benefit will come in installments or annuities, which will be paid out over the beneficiary’s lifetime. However, there are some payout tax implications for choosing either option.
Unlike other types of insurance, there’s no time limit for making a life insurance claim. Some people might not find out they were the beneficiary of a policy until years later, and the claim won’t be denied as long as the policy was paid up at the time of death. You can put in your claim as soon as you have the death certificate.
While filing a life insurance claim can understandably feel like a weight on your shoulders, the process is well-regulated and shouldn’t be overly complicated. Talking to the company that issued the policy is the best way to get started.
You can also use our guide to life insurance to learn more about how it works and how to get the best policy to protect your family.
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