The loss of a loved one can come as a complete shock, even if you expect it. The grief can be immense, often overwhelming. You may be unsure of what to do next or where to turn. Yet, even while you deal with your significant loss and uncertainties, the world keeps turning, bills come due, and legal matters need your attention.
If you fall into financial hardship, it can make your life even more difficult during this traumatic time. While it won’t solve all of your problems, filing a life insurance claim can help reduce some of your worries. As a beneficiary, you must file a claim to ensure that you do not waste the policyholder’s premiums.
Generally, there are five steps to filing a life insurance claim. However, there may be a few roadblocks you encounter.
Gather Essential Documents
Finding energy or focus, let alone finding and organizing all the documentation and paperwork necessary for a life insurance claim after losing a loved one, is quite challenging. However, getting your documents in order can help expedite the life insurance claims process, allowing you to receive the payout sooner. You might be relieved to learn that there typically are only a few documents you’ll need to claim your loved one’s death benefit:
The Death Certificate
Life insurance companies require certified proof of death to ensure that they only pay out on legitimate claims. The death certificate requirement helps prevent fraud.
It’s unlikely that you will need to file for a death certificate yourself. Instead, you should request a copy from whoever prepared it. In most cases, the medical professional confirmed the time and place of death or the funeral home. Another option is to request a copy of the death certificate directly from your local vital records office. You can usually do this over the phone, in person, or online for your convenience.
Life Insurance Policy Documents
The life insurance policy documents have all of the relevant information about your loved one’s life insurance policy, such as the term, the death benefit amount, policyholder details, and so on. The insurance company will cross-reference the documents with its internal records to ensure you file a claim on the right policy. Don’t panic if you can’t find the life insurance policy document. Instead, try contacting the insurance company directly or reaching out to the decedent’s financial advisor for help.
Also known as a “request for benefits” form, you will use this form to fill out pertinent information about the policyholder to include their policy number and the cause of death. You will also need to indicate your relationship to the policyholder with this form, as well as how you desire to receive the monies after the insurance company processes your claim.
Contact the Life Insurance Company
Once you have found all the necessary documents, it’s time to reach out to the insurance company that issued the life insurance policy. Notify them about the death of your loved one and file your claim. Being prepared before you contact them will make the process much easier and less stressful, preventing any unnecessary delays in receiving the financial support you need and deserve.
Wait While the Insurer Processes the Claim
After completing the steps mentioned above, the insurance company will begin processing your claim. One of their representatives will confirm that you are who you say you are and are the beneficiary that the deceased assigned to the policy.
Don’t be surprised if the insurance company asks you to provide proof of your identity, such as a:
- Driver’s license
- Social Security card
- Birth certificate
During this time, they will also check to see if the policy was still active at the time of your loved one’s death. If a policyholder stops paying on the policy, it will lapse, voiding it. Term life insurance policies may also expire, making any claims you file on them pointless.
The time it takes to process a claim can vary widely between insurance companies. You can do your part to speed up the process by responding promptly to any further requests for information from the insurance company. For example, you may receive the death benefit within a matter of just days, but it can also take as long as 60 days.
Insurance companies have an incentive to pay out as quickly as they can to avoid paying interest charges on yet unpaid death benefits. You can check with the insurance company to find out what its deadline is, as well as state laws.
How Long Do You Have to File a Death Benefit Claim?
No time limit applies when filing a death benefits claim. It’s well within your legal rights as a beneficiary to collect a death benefit any time after your loved one passes away. The only caveat is that their policy must have been active at the time of their death. Even still, you should keep in mind that the sooner you file the claim, the sooner you will get the check and can attend to your financial affairs.
Obtain the Death Benefit
You may have several options regarding how you receive the death benefit. These options typically depend upon the insurance company and the type of plan your loved one had.
The two simplest and most widely used options are lump sums or annuities:
Lump-sum: You get the full death benefit at one time. This allows you to immediately pay for pressing financial matters such as a funeral, mortgage, and other bills. With this option, you also won’t be required to pay taxes on the sum.
Annuity: Annuities are accounts in which you can invest the death benefit. The beneficiary then receives an annual payment for a certain number of years, beginning from a future date. You may need to pay taxes on investment gains from the annuity.
Execute Your Loved One’s Final Wishes
After receiving your loved one’s death benefit payout, you will likely need to shoulder their remaining financial responsibilities. While the death benefit can provide protection from financial duress, you may experience the different stress of navigating a new financial reality while continuing to grieve the loss of someone you love.
Your deceased loved one may have expressed their final wishes, potentially including their desires about their funeral or burial or how they wanted you to use the death benefit. Whenever possible, try to uncover and abide by these wishes. It can help reduce the stress you and your loved ones may be under during this already difficult time of life.
How Do You Know if You Are a Beneficiary on Your Loved One’s Life Insurance Policy?
Life insurance policies don’t pay out automatically after the policyholder dies. Someone needs to notify the life insurance company that the policyholder has passed away. Beneficiaries need to file a claim on the policy to receive the death benefit they deserve.
Loved ones should be sure to tell those they named as beneficiaries of their status. Letting this be known will help reduce confusion when someone dies and can give the policyholder and their beneficiaries time to discuss their final wishes and plans.
Keep in mind, however, that countless life insurance companies are out there. Just knowing you are a beneficiary on a policy won’t get you very far. If you want to file a claim, you need to know what insurance company holds the policy. You can find a lost life insurance policy. Still, it adds unnecessary stress to an already stressful situation while mourning the loss of a loved one.
If you are a beneficiary on someone’s life insurance policy, be sure they provide you with the following information:
- The policyholder’s full name
- The life insurance company’s name
- The policy number
- The insurance company’s contact information for death benefit claims
- A copy of the current policy
The National Association of Insurance Commissioners (NAIC) offers a life insurance policy locator service to help you further if you still can’t find your deceased family member’s life insurance policy.
What if All the Beneficiaries Are Deceased?
Suppose all the beneficiaries precede the policyholder in death. There isn’t a living named beneficiary to claim the life insurance policy proceeds. In that case, the death benefit could be placed into a trust and used to address any debts owed by the decedent’s estate. Life insurance policyholders should always list a contingent beneficiary or several beneficiaries, and update their policy after any significant life event such as the death of a spouse or a divorce.
Why Do Insurers Reject Death Benefit Claims?
Unfortunately, not all death benefit claims are approved and paid. Sometimes the reasons given by the insurance company are legitimate, and sometimes they aren’t. You may want to consult with an experienced life insurance attorney to have them review the policy, your claim, and the reasons for the denial to ensure you are exhausting all of your available options.
The life insurance company might reject claims due to:
- Contestability: A contestability period lasts two years from when the policy goes into effect. It protects the insurance company from fraud. The insurance company can deny claims if they think they received false information during the application process during this period. For instance, if the decedent failed to mention they had a chronic health condition or smoked. The life insurance company has the right to investigate whether a policyholder provided false information or purposefully omitted anything material on the original application. It’s crucial to note that even if a decedent died of causes unrelated to their lie or omission, the insurer can and will likely still deny the claim. Telling the truth on life insurance policy applications is absolutely essential. If the insured dies after the two-year contestability period, lies or omissions typically don’t count against their beneficiaries when filing a claim.
- Policy lapse: If premiums went unpaid, generally for any reason, the coverage is no longer active. If it wasn’t active at the time of the policyholder’s death, you won’t have a valid claim to be paid.
- Suicide: Many policies have a suicide clause meaning that they won’t issue a death benefit if the insured commits suicide during the first two years of the policy’s inception.
- Homicide: If the policyholder died from violence, the insurance company has the right to hold the payout until the insured’s beneficiaries are cleared of any criminal wrongdoing.
- Other types of uncovered death events: Insurance policies can also exclude different kinds of deaths from coverage. For example, the policy may not cover deaths from wars or incredibly risky behavior such as skydiving or scuba diving.
Contesting Denied Life Insurance Claims
Suppose you are a beneficiary who believes the insurer unfairly denied a life insurance benefit. In that case, you may want to hire a seasoned attorney to help determine your next best steps. Each insurance carrier has an appeals process. You will want to reach out to the insurance company to find out why the claim ended in denial, what the appeals process is, and the deadline to appeal.
If you can prove to the insurer that their decision was incorrect or unfair, they may handle the matter administratively without the need to go to court. However, convincing insurers to reverse their denial decision isn’t easy. However, carriers usually take appeals more seriously when an attorney represents the beneficiary.
After the death of a loved one, most people experience many feelings and concerns. It’s imperative to advocate for yourself and your needs. One way to do this is to file for death benefits if you are the beneficiary of a life insurance policy owned by the deceased. In doing this, you can help meet your and your family’s financial needs.
If the insurance company denies your claim, you can and should continue to advocate for your needs by contacting an experienced attorney. Let them be your advocate for you while you focus on healing emotionally and finding ways to remember your deceased loved one meaningfully.
Following graduation from Loyola Law School in New Orleans in 1990, Price McNamara served as a Federal Judicial Law Clerk to the Honorable John M Shaw, Chief Judge, United States District Court Western District of Louisiana.
Mr. McNamara founded J. Price McNamara ERISA Insurance Claim Attorney, and began putting his past experience to work for the injured and disabled clients he now represents against the insurance companies in personal injury and long term disability and other insurance disputes in both federal and state courts