How to File a Life Insurance Claim

Filing a life insurance claim can be an emotional and upsetting process. For those faced with filing a claim, they are also faced with the loss of a loved one. In the midst of funeral arrangements, burial expenses, and grief, the last thing that mourners want is a lot of paperwork. Unfortunately, filing a claim does require some paperwork for legal and tax purposes, but with the knowledge necessary, this process can be simplified. This article will review the basic steps required for the process of filing a life insurance claim and provide a checklist for those who are faced with this difficult time.

Step One: Make a Phone Call

The first step when filing a life insurance claim is to call your life insurance agent. This agent should be your first point of contact, can tell you what paperwork is required, and help with some of the legwork. If the plan is through an employee benefits package, the employer or HR department of the company should be contacted and informed of the situation as well.

Step Two: Double Check the Policies

There may be additional policies for an individual that might not be obvious at first glance. Many individuals may have a separate policy in addition to an employee based policy. Some may have additional policies through credit card companies, mortgage insurance, accidental death insurance or policies from other financial institutions. Review credit card companies, mortgage accounts, and bank statements to see if any of these policies exist. In addition to checking for additional coverage, contact lenders and ask specifically about death benefits which may include additional policies, exceptions, or additional time given to help ease payments.

Step Three: Gather the Paperwork

When filing a life insurance claim, it is important to have all of the necessary paperwork in order. All companies, lenders, accounts, or agencies will require a copy of the death certificate and in some cases, a copy of a marriage certificate as well. Some companies will require a certified copy of the death certificate, so it is best to get a few of those on hand, ready to provide when necessary. You should also have access to current mortgage or loan paperwork, credit card statements and employee benefits information.

Step Four: The Waiting Game

Because of the nature of having a death in the family, insurance companies often try to process life insurance payouts rather quickly. Generally, after all of the necessary paperwork is in place, the processing phase shouldn't take longer than a week. The insurance company must review your claim, confirm the policy is valid and make certain its requirements have been met. During this time, it is important to do anything necessary to avoid missing a payment such as mortgage, or other bills. If it is not possible to continue making payments, these companies should be contacted and informed of the situation. Most companies will make exceptions for a few months to allow family members to get their finances in order and allow time for the life insurance policy to payout.

Step Five: Choosing Payout Options

Different insurance plans and companies have different insurance payout options. The insured person may have chosen a payment plan, or may have selected to allow beneficiaries to select a payment option. Generally, there are two main options when it comes to life insurance payouts:

Lump sum payments. This is often preferred, in part because there is no income tax levied on the proceeds and beneficiaries are then free to invest and manage their proceeds.

Regular scheduled payments. This method may be best for those who prefer not to handle a large sum of money, such as children. This is also beneficial for those who prefer not to manage investments on their own, because some insurance companies invest the policy funds for the beneficiary and pays them interest proceeds.

Life insurance is a beneficial and necessary part of being an adult who is responsible for others. It is the only insurance policy with the means to take care of those you love and care about after you are gone. Obtaining a life insurance policy is relatively easy and should be taken seriously once you reach adulthood, or when you have other people who are depending on you for financial obligations. Although it is best if the policy never needs to be used, it can save your family from financial ruin in the face of a tragedy.

By Matt Reynolds - Google+

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