Filing a life insurance claim is a crucial process often undertaken during challenging times. When a loved one passes away, navigating the intricacies of a life insurance claim can seem daunting. Luckily, the process of doing so may be less complicated than you would otherwise think. Expect to take the following actions when filing a life insurance claim:

Gather necessary documents
Follow the claims process
Arrange the payout of benefits

However, while the process is relatively straightforward in theory, there could be additional steps or complications that could arise, given the details of your policy or other life circumstances. Read on to learn more about how to navigate the life insurance claims process.

Filing a Death Benefit Claim

When an insured individual passes away, the life insurance policy pays out a death benefit to the named beneficiaries. However, this does not happen automatically. Instead, each beneficiary needs to file their own death benefit claim by completing and submitting paperwork and required documents to the life insurance company. You can typically do this by completing the following steps.

1. Gather Necessary Documents

Having the documents you need ready before you get started can help speed up the life insurance claims process. Generally, you need the following items:

Certified death certificate: You can typically request this from the medical examiner’s office or the funeral home or order copies from your local vital records office.
Copy of the life insurance policy: This document includes important information, including the policy number, names of the beneficiaries, and the death benefit. If you cannot locate the policy document, you may be able to get a copy from the insurance company.
Claim form: Also called a request for benefits, this form provides the insurance company with the information needed to process your claim.

2. Follow The Claims Process

To begin the claims process, start by contacting the insurance company to notify them of the death and request the necessary claims forms. You can also confirm which documents are required and where to send them.

Once the insurer receives your documents, they review your information and confirm that the policy is still in force and that you are a named beneficiary. As long as everything checks out, the carrier can proceed with paying out the life insurance benefits.

3. Arrange Payout of Life Insurance Benefits

An important decision you need to make is how you would like to receive your benefit. Depending on the insurance policy, some of the options you may be able to select include:

Lump sum: You receive the entire death benefit all at once. This is generally tax-free.
Installment payments: You have the insurance company pay the death benefit on a set schedule over a specific period. The principal is typically tax-free, while any interest earned is taxable.
Life income: You receive the death benefit payment over your life expectancy. The amount of income varies depending on your age, gender, and the total amount of the death benefit owed to you.
Interest only: You can choose to have the insurer pay you interest only and hold the death benefit. In this case, you name a beneficiary who receives the death benefit when you die. The interest payments are typically taxable.

If there are multiple beneficiaries, each individual can choose their own payout method. Generally, death benefit payouts occur within less than a month from the time the paperwork is submitted in good order. Many states also have prompt-payment laws which require insurance companies to process claims within a certain time frame.

How Policy Details Affect the Claims Process

While most life insurance policies offer similar outcomes, the payment of a benefit upon the death of the policy holder, many policies feature varying details that affect this process. Here are a few of the most common.

Filing an Accidental Death and Dismemberment Claim

Depending on the circumstances surrounding the insured’s death, you may be eligible to file an accidental death and dismemberment (AD&D) claim. Some individuals have separate AD&D policies, while others have added this coverage as a rider on a traditional life insurance policy.

AD&D coverage provides a benefit when the insured is dismembered or dies as a result of an accident. To qualify, the individual’s death or dismemberment must be from something other than a natural cause — and not one that’s excluded from the policy. Examples of commonly covered causes include motor vehicle accidents, drowning, falls, or homicide. The death must also have occurred within a specified period after the accident occurred.

When filing an AD&D claim, it’s typically necessary to submit proof of loss that shows that the individual died from an accidental cause. This may include the death certificate, autopsy report, police report, hospital records, or other documentation.

Filing Living Benefit Life Insurance Claims

Some life insurance policies pay the benefit while the covered individual is still alive. This is known as a living benefit. The insured individual is typically responsible for filing the claim. However, if they are unable to do so, their power of attorney can typically act on their behalf. Each insurance company’s living benefit claims process may vary, so it’s important to contact the insurer for instructions.

Accelerated Death Benefit Claim

Some life insurance policies have an accelerated death benefit built in or allow you to add it as a separate rider. Claiming this life insurance benefit allows you to receive all or a portion of your death benefit while you’re still alive if you meet the requirements in the rider. Accelerated benefits generally range from 25% to 95% of the death benefit, with the named beneficiary receiving any remaining death benefit once you pass away.

Waiver of Premium Claim

A waiver of premium is an optional rider that you can add to your life insurance policy. This allows you to stop paying your premiums without lapsing your policy if you experience a qualifying event, such as a disability or terminal illness that prevents you from working.

Waiver of premium riders typically have a waiting period before they go into effect. Once the waiting period has passed, you or your power of attorney can file a claim with the insurance carrier by submitting the required claims form, a statement from your physician, and any other requested documentation.

Terminal, Critical, and Chronic Illness Claims

Accelerated death benefits may pay out when the insured has a terminal, critical, or chronic illness. The three are distinguished from one another as follows:

Terminal illness: A terminal illness is an ailment that shortens your life expectancy to a specific time period (typically 24 months or less).
Critical illness: A critical illness comes with both high medical costs and shortened life expectancy. Kidney failure, stroke, or heart attack are examples of critical illnesses.
Chronic illness: A chronic illness prevents you from completing at least 2 of the six activities of daily living — eating, using the bathroom, bathing, transferring, getting dressed, and controlling bladder and bowel functions.

When filing an illness claim, it’s typically necessary to provide a doctor’s statement verifying that you have a covered illness and that your life expectancy is less than the policy’s or rider’s threshold. This is submitted along with the claim form and any other requested documentation.

Long-Term Care Claim

Some life insurance policies have a long-term-care (LTC) rider, which can help pay for costs such as living in a nursing home or long-term care facility or hiring a home healthcare worker. Many LTC riders pay a percentage of the death benefit each month or a lump-sum amount. It’s also common for LTC riders to have a waiting period of around 30–90 days before the insured can begin receiving the benefit.

Some riders offer indemnity coverage, while others offer reimbursement. Indemnity plans pay a set amount each month, which the insured can use for whatever expenses come up. Reimbursement plans require you to submit receipts for your long-term-care costs and reimburse you for your covered expenses. The claims process typically varies depending on which type of rider you have.

What to Do If You’re Unsure About Policy Details

After the loss of a loved one, there can be confusion about life insurance coverage. You may be unsure of whether you’re a named beneficiary or if the policy is active.

If you’re able to locate an insurance policy, calling the insurance company may help you gather some information. In this case, you typically need to provide a copy of the death certificate before the insurer can provide information. If it turns out that you are not a named beneficiary, the carrier may not be willing to offer any additional details.

Discussing insurance coverage with the insured while they are still alive can also help prevent confusion and frustration after they pass away. If possible, try to confirm what policies they have in place, where the documents are located, and who the named beneficiaries are. That way, you can easily navigate the life insurance claims process when the time comes.

Potential Issues of Life Insurance Claims

While filing a claim for life insurance is fairly straightforward, there are some potential issues you may run into. Here are a few reasons your claim may be denied or delayed.

You are not a named beneficiary: The insured may have changed their beneficiary designations without your knowledge.
The policyholder stopped making payments: Nonpayment can lead to policy lapse, which removes the carrier’s obligation to pay the death benefit. If you are still within the grace period (typically 30 to 60 days), you can make the payments and reinstate the policy.
The suicide clause is still in force: If the insured committed suicide within the first two years (the length can vary by insurer) after the policy was in force, the carrier may deny the death benefit.
The insured died by homicide: The insurer typically waits until beneficiaries have been cleared of any involvement before paying the death benefit.

If you run into a claim denial or it’s taking longer than expected to receive your life insurance claim, contact the insurance company. They may be able to provide you with additional details or discuss whether you have any additional options.

All In All

Filing a life insurance claim is a significant aspect of securing financial stability during challenging times. By following the steps outlined in this guide, you can confidently navigate the process and ensure that the necessary paperwork and communication are handled efficiently.

While the emotional toll of losing a loved one is immeasurable, taking proactive steps to file a life insurance claim can provide some financial relief. Remember, insurance providers are there to assist you through this process, so do not hesitate to reach out for support.

How to File a Life Insurance Claim

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