When a loved one dies, many people don’t want to think about collecting life insurance benefits immediately. They want to mourn their loss in peace. Yet, understanding the process and filing as soon as possible improves the odds that they receive their benefits promptly.
At Medical Profiles Inc., we answer your questions about the process of collecting life insurance benefits.
#1 You Name a Beneficiary
The collection process begins long before your death. You should name a suitable beneficiary first. Most policies allow you to change beneficiaries during your life as needed. For example, you might name your mother as a beneficiary but change it to your spouse after you get married.
You can choose one primary beneficiary or multiple beneficiaries to receive death benefits. The most common beneficiaries include:
- Charities or nonprofit organizations
- Business partners
- Parents
- Spouses
- Adult children
- Siblings
- Close family members or friends
#2 Your Beneficiary Files a Claim
After you die, your beneficiary or beneficiaries must file claims to receive their payout. They will likely file the claim with the insurance agent associated with the policy. Some companies allow the life insurance beneficiaries to file online, while others require them to file paperwork at the agent’s office.
Often, your agent will require that your life insurance beneficiaries provide documentation of your death and their status as beneficiaries. Some documents to file with a claim include the death certificate and a printed copy of the insurance policy.
#3 The Company Determines to What Your Beneficiary Is Entitled
Before collecting life insurance benefits, your beneficiaries must wait for the insurance company to determine the benefits to which they are entitled. This partly depends on the type of insurance policy you choose and what it pays out. Interest earned, lump sum payments, and retained accounts.
A policy involving interest earned or annuities will pay out in installments over a specified period. A lump sum payment, the most common payout, is given to your beneficiaries in fullness. A retained account, on the other hand, allows your beneficiaries to use checks or cards to withdraw money and treat it like a bank account.
#4 Most Insurance Companies Pay Within a Month
When can your beneficiaries expect the insurance payout? Most insurance companies sort out the paperwork within a month or two. During this time, the agents decide whether to deny or accept the claim.
Sometimes, they’ll ask your beneficiaries for more information involving the circumstances of your death. If the company denies the claim, they’ll accompany their denial with the reason behind it. However, most beneficiaries receive payouts within two months of the claim date.
#5 Prepare for Potential Delays Before Collecting Life Insurance Benefits
Occasionally, your beneficiaries may face a few obstacles before they can access their payout. Although many companies aim to provide the payout within a couple of months, certain roadblocks can make the process drag on for up to two years.
Some policies have a clause that allows the insurance company to investigate the circumstances surrounding the death. The insurer could use this contestability clause to ensure that fraud or misinformation doesn’t influence their final ruling.
Qualifying for Life Insurance Starts with a Paramedical Exam from Medical Profiles, Inc.
Life insurance supplies your surviving family members with much-needed stability in the event of your insured death. That means peace of mind for you throughout your life and for your beneficiaries when collecting life insurance benefits. A paramedical exam is the first step toward securing financial security.
Call us at (832) 251-3926 to make an appointment at our office or in your home. At Medical Profiles, Inc., our team can travel to you.
