How long does it take to process life insurance claims? What are the processes involved? How do you file an application claim? Well, i advice you read on to find out what you need to know. If you are a beneficiary of a life insurance policy, you would want to know how to file claims and get your benefits. This is what we are going to discuss today.
When someone who has you as their beneficiary passes away, you need to know how to collect their entitlements because it is not an estate executor’s duty to handle this for you and since most beneficiaries are usually people who depended on the policy holder for financial support, it is important to know how to get compensations quickly so as to avoid running into debts. Before you can get paid life insurance benefits, you have to go through a process which includes the following steps-:
How to Process Life Insurance Claims
Table of Content
- 1. Search for Insurance Policies
- Individually owned Policies
- Group Policies
- Employer-based policies
- Accidental death and dismemberment policy
- Travel Accident Insurance
- Mortgage life insurance
- Credit life insurance
- 2. Inform insurance companies that the policy holder has passed on
- 3. Fill out the claims forms
- 4. Wait it out
- 5. Payments
- 6. Taxes
1. Search for Insurance Policies
First, you have to search for the insurance policies that the deceased owned. Deceased policy holders may hold more than one insurance policy and you need to take up the role of an investigator so that you don’t miss out on any benefits. Some of the policies you could find are-:
Individually owned Policies
These are policies bought by the policy holder. If you think that your spouse or one of your family members have one of such policies and you cannot find the insurance policy certificate, you should approach the insurance broker or the insurance company for help. A look at the policy holder’s bank statements or checkbook can also help you to locate evidence of payment.
Group policies are obtained to provide coverage for a group of people. This may be bought by an employee, a credit union the policy holder belonged to or a bank. Even though the group owns the policy, an insurance certificate is given to the policy holder as proof of insurance. You should look out for such certificates in the policy holders file or safe deposits boxes.
You should also find out if your spouse’s employee has insurance policy coverage for its employees. A lot of companies purchase group life insurance policies for their employees which you may not know unless you ask questions and try to find out.
Accidental death and dismemberment policy
This is offered by banks, credit unions or employers in case of accidental deaths. As in, you may want to check the deceased records or check with his employers to see if he / she had one of such policies.
Travel Accident Insurance
If the cause of death was as a result of an accident, then you may be entitled to a travel insurance policy. Such policies are usually paid for alongside the costs of obtaining a ticket. This means that when you buy a ticket, you also buy the policy and that automatically qualifies you as beneficiary to receive compensation from the transport company in case of an accident that leads to death.
Mortgage life insurance
This is designed to cover for the life of someone who purchased a mortgage life for the life of someone who purchased a mortgage life insurance. This money is used to pay off the balance of the policy holders outstanding mortgage should he die before expiry of the mortgage. If your spouse or family member died leaving behind some mortgage debts, you could get these paid off using the mortgage insurance benefits.
Credit life insurance
This is usually issued to someone who takes a loan or a line of credit. In the event that the policy holder dies with an outstanding credit, the benefits would be used to pay off the outstanding balance. When you have found out all the life insurance policies that the beneficiary owns, you should do the following-:
2. Inform insurance companies that the policy holder has passed on
This should be done as soon as possible. If the policy was bought through an agent, you could inform the insurance agent who would then provide assistance with processing the claims.
3. Fill out the claims forms
When you have notified the insurance company or the agent, you would be given a claim form to fill which would be submitted along with the death certificate of the policy holder. If you are not the only beneficiary, other beneficiaries would have to fill have to fill the form too so you should find a way to reach out to them.
Another document you would have to fill is the IRS form W-9 which would be used to notify the IRS of any interests paid to you. Ensure that you fill this form as carefully and accurately as you can to make the process faster and easier.
4. Wait it out
Once you have filed the claims, what is left is to wait it out. Insurance benefits are not paid out immediately and may take some time but as long as you fill the forms correctly and submit all the required documents especially the death certificate showing the cause of death, you won’t have any problem whatsoever but you should continue to monitor the process by communicating with the insurance company or insurance agent regularly.
Payment would mostly depend on what the policy holder stated in the insurance policy and may also depend on how you choose to collect your settlements. The two major ways to collect your benefits is through a lump sum payment or in installments. For lump sum payments, you would be paid the insured sum immediately and fully while for installment payments, you would be given a fixed or predetermined sum at specified times.
A lot of beneficiaries choose installment payments to prevent misuse of the funds and to ensure that the funds are used for what it is intended. If a deceased leaves young kids behind for instance, He or she may choose installment payments, so that money is made available for the kids upkeep and education until they are of age.
Whether you would have to pay taxes on your received benefits or not depends on the type of life insurance policy the deceased purchased. While some policies are tax free, some require taxes to be paid. So, you would have to find out if you have to pay taxes or not from your insurance agent or financial advisor.