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How to File a Life Insurance Claim in 4 Steps

Updated Jan. 14, 2022
Christy Bieber
By: Christy Bieber

Our Insurance Expert

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Life insurance provides important protection for policyholders by paying a death benefit if they pass away. Surviving beneficiaries must know when and how to make a life insurance claim to obtain the money life insurance provides. This guide on how to claim life insurance can help.

What is a life insurance claim?

A life insurance claim is a claim to obtain a death benefit. Policyholders buy life insurance coverage and name beneficiaries who will receive a death benefit if they pass while the policy is in effect. The death benefit is a sum of money intended to provide for the beneficiary's needs after death.

The original policyholder must have passed away before a life insurance claim can be made. It is the beneficiaries -- those who are designated in the policy to receive the death benefit -- who must go through the process of figuring out how to claim life insurance.

Beneficiaries must submit claim forms and other documents to the insurer. If the claim is approved because the policyholder died for a covered reason while the policy was in effect, the insurer will pay out the death benefit to the beneficiary.

How do I make a life insurance claim?

If a deceased person had life insurance coverage, beneficiaries should review the policy documents. These documents will explain exactly how to make a life insurance claim for that particular insurer.

There are, however, some common steps involved in making a life insurance claim. Here's what they are.

1. Find the deceased's life insurance policies

The first step to making a life insurance claim is to find the deceased's life insurance policies. This can be complicated, especially if beneficiaries aren't sure how to find out if someone has life insurance or where policies are located.

The National Association of Insurance Commissioners has a life insurance policy locator. Loved ones of the deceased can create an account and provide information about the person who passed away. This information can be used to initiate a search request for an active life insurance policy.

Some states also operate search engines, such as California's Life Insurance Settlement Property Search run by the California Controller's Office.

If the deceased had an estate planning attorney, the lawyer could also be a helpful resource. Here are a few other ways loved ones can search for the policy:

  • Look through the deceased's personal belongings
  • See if they had a safe deposit box where important papers are kept
  • Review past bank or credit card statements for a record of premium payments

Find out if you're a beneficiary

The insurance policy documents should specify who the beneficiaries are. In some cases, there are multiple beneficiaries. When a life insurance claim is made, they will split the proceeds. Only a beneficiary can collect the death benefit.

2. Gather important documents

Three crucial documents need to be provided to the insurer to make a life insurance claim:

  • The death certificate: This provides proof of death. It can be obtained from the funeral home where the deceased was buried or from the state's vital records office. The medical professional who confirmed the time and place of death may also provide a death certificate.
  • The insurance policy document: This provides details about the death benefit and the named beneficiaries. Insurers will cross reference the policy provided by the claimant with what they have on file to ensure the benefit is paid out correctly.
  • An insurance claim form: This is also known as a request for benefits. It must be completed by the claimant. It typically requests specific information, such as the relationship to the beneficiary and the chosen method of payment.

3. Contact the insurance company

The next step is to get in touch with the insurance company to submit the life insurance claim. The policy documents will specify when and how to submit claims. Often, documents must be sent in by mail.

How long does a beneficiary have to claim a life insurance policy?

There is no required time frame to make a life insurance claim. In many cases, the death benefit earns interest until it is claimed.

4. Decide how the proceeds will be distributed

Life insurance payouts are generally made tax free to beneficiaries. So those receiving the money generally will not need to worry about a life insurance tax regardless of the chosen payment method.

Those making a life insurance claim may wonder, "How do life insurance payouts work?" In most cases, beneficiaries can choose the method by which they receive payments. Options include the following:

Get a lump-sum payment

Beneficiaries can choose to get their money all at once. This is very common. The insurer will pay out the full death benefit right away with this option. This requires the beneficiaries to manage the money carefully.

If the death benefit is more than $250,000, beneficiaries may want to split the money in multiple bank accounts. That's because FDIC insurance only covers up to $250,000 in deposited funds per person per account.

Receive installment payments

Beneficiaries who don't want to be responsible for managing a larger sum of money can choose to have it paid out over time. For example, if the policy provided a $500,000 death benefit, the beneficiary could request $50,000 payments each year for 10 years.

The insurer keeps the money in an interest-bearing account for beneficiaries who choose this method. Interest is taxable.

Keep the money in a retained asset account

Some insurers let beneficiaries request that life insurance proceeds go into an interest-bearing account that they can draw from as desired. Beneficiaries are provided with a checkbook they can use to access the funds.

The funds in these accounts are guaranteed by the insurer even if they are above $250,000, which is the FDIC account limit.

How long does it take to get life insurance money?

Typically, insurers have 30 to 60 days to pay the death benefit after receiving a valid claim with required documentation. This is especially important to know for people who are waiting for the proceeds of a life insurance policy to replace household income the deceased is no longer providing.

However, if the claim is contested, then there's a different answer to the question, "How long do life insurance claims take?" In this case, it could take months or even years to sort out whether the claim is valid and should be paid.

What to do if your life insurance claim is denied

Having a life insurance claim denied can be devastating. Beneficiaries must know how to respond.

Beneficiaries who believe their life insurance claim was improperly denied can appeal the denial. This involves contacting the insurer directly to initiate the appeals process. Hiring an attorney or contacting the state's Department of Insurance for help could be advisable.

Insurance companies must provide written documentation of the reason for the denial. Common reasons include:

  • Death by a cause that is not covered, such as suicide
  • Death while doing an excluded activity, such as skydiving (or something else the insurer specified wasn't covered)
  • Dishonesty when the policyholder submitted their application
  • Policy lapse due to nonpayment of premiums

FAQs

  • Yes, generally. In some states, the Model Unclaimed Life Insurance Benefits Act is in effect. This requires insurers to check the Social Security Administration's Death Master File. If they discover a policyholder has died, they will be required to make a good faith effort to provide the appropriate life insurance claim forms to the beneficiary. Other states have their own laws, but they also require insurers to search this Master File periodically and provide notification to beneficiaries after discovering the death of a policyholder.

  • Life insurance companies may refuse to pay a life insurance claim if:

    • The policyholder lied on an application
    • The insurance coverage was not in effect at the time of death (either due to a waiting period or because the term of coverage expired)
    • The policyholder failed to pay premiums and coverage lapsed
    • The policyholder died doing an excluded activity, such as deep water scuba diving or flying a noncommercial airplane
    • The policyholder died of a cause that was not covered, such as suicide
  • Unclaimed life insurance money is turned over to the state after a certain period of time has passed. The specific timeline varies by state. States must then make an effort to find beneficiaries. If they are unable to do so, the money will be turned over to the treasurer.

  • The average life insurance payout varies by company. For example, Haven Life reports that its average life insurance payout is $618,000. However the specific amount beneficiaries receive depends on the death benefit the policyholder chose when purchasing coverage.

  • Life insurers cannot refuse to pay a legitimate life insurance claim. An insurer can refuse to pay if:

    • The policyholder was dishonest and committed fraud in the application
    • The death was not covered
    • The policy lapsed due to nonpayment of premiums

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