How does Life Insurance Work When You Die
What is the first step you should do if you are a beneficiary
The fastest route is if the beneficiary contacts the life insurer. That’s why it’s important the beneficiaries know all the information about the policy. Make sure you tell them you have a life insurance policy and who are the beneficiaries. Give the beneficiaries a copy of the life insurance.
Once the required information is provided to the insurer, they can then start the claim process, which typically takes 30 days or less.
The company will transmit the money directly to you. It does not become part of your loved one’s probate estate, although it may contribute to his gross estate for estate tax purposes.
Life insurance proceeds that go directly to a named beneficiary never become part of the decedent’s probate estate, so the money is not available to creditors and the beneficiary has no legal obligation to use the money to satisfy the decedent’s debts.
How long Life Insurance Companies take to pay a claim?
Once you’ve submitted all of the requested paperwork, the insurance company should begin processing the claim. Most claims are processed and paid within 30 days of the date of your application.
However, processing times vary by company. If more than a month has passed without a response, be sure to follow up with the insurance company to check on the status of your claim form and to make sure all of your information was received. Incomplete forms, missing documents and inaccurate data can all result in delayed approval.
Surprisingly, the life insurance companies will frequently simply mail the check by regular post.
In most cases, insurance companies are governed by the laws in their particular state that set guidelines for the times that claims should take to be settled.
If you have questions about your claim, get in touch with your insurance agent first. If you are still not satisfied, contact your state insurance commissioner.
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