When you purchase a life insurance policy, you need to be sure that the company has a good track record for timely disbursements of payoffs. Companies with a high life insurance rating generally perform well. Most insurance companies try to make the process of claiming your insurance policy as easy as possible and are able to make payoffs within 7 to 60 days from the date of claim. But in order to initiate the process, the beneficiary needs to take certain steps.

You will need to inform your insurance agent or broker about the decease of the policyholder. Your broker will act as the middleman between you and your life insurance company. He or she can help you fill out all claim documents and guide you in the process of filing for a claim. If you do not have an agent, you can directly call the insurance company and ask how you can proceed with filing a claim. If there is more than one beneficiary on a insurance policy, each beneficiary must fill out forms and send it to the insurance company.

You will need to decide how you want your payment to be made. You have the following options:

  • You can receive a lump sum. This gives you the advantage of using the death benefits for immediate needs, such as funeral expenses, and gives you the flexibility of how you would like to invest the rest of the money.
  • You can ask the life insurance company to hold the proceeds for a specified time period after which the company will pay the death benefits along with any interest accrued.
  • You can ask the insurance company to issue payments in installments over a specific period of time. The amount paid will include both principal and interest.
  • You may also choose a life income payment plan, similar to an annuity. This option guarantees income for life. The amount depends on factors such as the amount of death benefit, gender and age.
  • Look for multiple insurance policies. It is very common for people to have more than one life insurance policy. If the policyholder was working, he may have a life policy given by his employer. He or she also may have additional coverage under an employee group life insurance plan. If the policyholder had an outstanding mortgage, you might find additional life coverage under mortgage insurance. Mortgage life insurance will pay off the balance amount left on your mortgage.

    As a beneficiary, you should check other insurance policy that may apply. Such as car insurance if the policyholder died in a car accident; travel insurance if he/she died during travel.

    What to do when you can’t find a insurance policy? If you know the life insurance company, you can talk to them directly explaining the situation. The company will search their database and if it comes up with a match, and the policy is still in good standing, they will process the claims papers.

    What to do when you suspect there is a insurance policy but cannot find it? Try looking through old check books and old credit card statements for the insurer’s name. You should also contact the deceased’s employers to check if there was any life policy issued at the workplace. Look in security deposit boxes or other storage places used for important documents. If you still cannot find it, you may want to contact the American Council of Life Insurance (ACLI). For a small administrative fee they will search their databases to locate a policy.

    What happens if there is no claim made on a life insurance policy? If there is no claim made on a life insurance policy, the death benefits are turned over the state where it becomes “unclaimed property”. However, if the life policy was in force when the policyholder died, a claim can be made, even decades later.

    When will death benefits NOT be paid?

    • If the policyholder has not paid premiums on a term life insurance policy, the policy may have “lapsed” in which case no claims can be entertained.
    • If there is a fraud in the inception of the policy or fraud by substitution, the death benefits will not be paid out.
    • Another common ground for denying claims to beneficiaries is “material misrepresentation”. This means that at the time of original application, application for reinstatement cases or application for late enrollment in a group case, false information was provided that, if fully and truthfully disclosed at that time, would have resulted in refusal of policy by the insurer, at least on the terms and conditions issued.
  • To avoid delays in payoffs, make sure you fill in personal details on application forms accurately and truthfully. Choose a life insurance company that has a high rating by reputable insurance rating institutions such as A.M. Best, Fitch and S&B. To easily compare life insurance rates, use online insurance providers. They can provide you with free life insurance quotes from the best insurance carriers.

    About AccuQuote:
    AccuQuote is a leader in providing term life quotes to people across the United States. In 1986 it began operating with a single goal: to make the process of buying term insurance as easy as possible for its customers. Their experienced professionals consistently deliver the most affordable term life insurance rates by comparing thousands of life insurance policies from dozens of top-rated carriers.

    About the author

    Denise Mancini-Blonda is manager of public relations and marketing communications for AccuQuote. In addition to overseeing all corporate media relations, internal executive and employee communications, she plays a key role in the overall content development of the company’s online and offline marketing campaigns. This entails overseeing and implementing AccuQuote’s social media, blog and podcast strategies, as well as its word-of-mouth marketing campaign.