It’s unfortunate that a life insurance claim calls for paperwork which is hardly welcome to anyone when they are facing the loss of a loved one. Legal and tax reasons however require beneficiaries to file claims for settlement funds. The process is detailed in some basic steps, also serving as a checklist to ensure that all the necessary details are covered.
What You Have To Do For Filling A Life Insurance Claim?
Always call your insurance agent first to ask about the paperwork required for any life insurance policies owned by the deceased. If the life insurance policy turns out to be a part of an employee benefits package, contact the employer to ask for the procedure.
One doesn’t always know the type of life insurance policies a spouse or family member carried. Employers, credit card companies or other financial institutions offer group life insurance policies. They are easy to sign up for and can often be free or very inexpensive. If possible, review credit card statements and bank statements and find out from the employer or benefits administrator about any additional insurance coverage the deceased may have held.
Other possible policies could include travel life insurance, mortgage life insurance, accidental death insurance and credit life insurance. Each of them can be significant so study the fine print in all related paperwork. Ask lenders specifically about death benefits if you are unable to find the information in the departed person’s records.
Get a copy of the death certificate of the deceased. Sometimes a marriage certificate copy can be helpful especially in case of ex-spouses using names from former marriages. You also need access to current mortgage or loan paperwork, credit card statements and employee benefit information. These will come handy in case of any discrepancies to serve as proof of your loved one’s possessions.
File your claim…
Every adult beneficiary of a life insurance policy needs to fill out a proof of death form for the company behind the life insurance policy. This requires a copy of the death certificate. Ask your insurance agent to get you these forms and help with the process. All of you have to fill out other associated forms too, that fulfill income reporting requirements for the IRS.
The processing period should take less than a week. The insurance company will review your claim, confirm validity of the policy and fulfillment of other requirements. If the insurance company feels the policy conditions have not been met, for instance the death certificate may be missing, the phase is likely to be delayed until the requisite information is obtained.
If the insured person had chosen a payment plan, you’ll find out at the time of filing your claim. Certain plans could allow beneficiaries to choose a payment option once they become eligible for the payments.
Life insurance policies are paid out to beneficiaries usually in the form of lump sum payments. This is the preferred option due to the lack of income tax being levied on the proceeds, allowing beneficiaries to be free to invest and manage their proceeds. Other options include regular scheduled payments, which is usually used for beneficiaries incapable of managing a large sum of money, like children, and settlements where the insurance company invests the policy funds, paying the interest proceeds to beneficiaries.