How to Make a Life Insurance Claim: A Step-by-Step Guide

Life insurance offers a critical safety net for families, providing financial security when the unexpected occurs. While no one likes to think about the time when they may need to use it, life insurance claims are designed to help ease financial burdens after the death of a loved one. Knowing how to file a life insurance claim can make a difficult time slightly easier by ensuring that the benefits you’re entitled to are received quickly and efficiently.

This comprehensive guide will walk you through the step-by-step process of making a life insurance claim, from gathering the necessary documents to receiving the payout.

Understanding the Types of Life Insurance Claims

Before diving into the steps of making a life insurance claim, it’s essential to understand the two primary types of claims that beneficiaries may need to file, depending on the type of policy:

Death Benefit Claims: These are the most common claims, triggered by the insured's death. The death benefit, often the face value of the policy, is paid out to the beneficiaries listed in the policy.

Accelerated Benefit Claims: Some life insurance policies include an accelerated death benefit rider, which allows policyholders to access part of the death benefit if they are diagnosed with a terminal illness. This type of claim is made while the insured is still alive but facing significant medical challenges.

For the purposes of this guide, we’ll focus primarily on death benefit claims, as they represent the majority of life insurance payouts.

Step 1: Notify the Insurance Company

The first step in making a life insurance claim is notifying the insurance company of the policyholder’s death. While some companies might automatically be notified through public death records, it is typically the responsibility of the beneficiary to initiate contact. Here’s how you can do that:

A. Gather the Policy Information

You’ll need the following information ready when contacting the insurance company:

The Policy Number: This is the unique number assigned to the life insurance policy.

The Insured’s Full Name and Date of Birth: Basic identifying information will help the insurance company locate the policy in their records.

Your Relationship to the Insured: Whether you are a spouse, child, or another designated beneficiary, the insurer will need to verify your right to the policy’s benefits.

If you don’t have a copy of the life insurance policy, start by checking the deceased’s important documents or contacting their financial advisor. If necessary, the insurance company can also look up the policy based on the insured's information.

B. Contact the Insurance Company

Once you have the necessary information, you can call or email the life insurance company’s claims department to report the death. Most insurers will guide you through the claim process and provide the necessary forms.

Step 2: Obtain the Death Certificate

After notifying the insurance company, the next step is to provide proof of the policyholder’s death. A certified copy of the death certificate is the most critical document required when filing a life insurance claim. This official record is typically issued by the government or local health department and contains details of the deceased’s death.

A. How to Obtain a Death Certificate

Request from the Funeral Home: Most funeral homes can help you obtain certified copies of the death certificate. When planning the funeral, ask the director to request multiple copies.

Local Health Department: You can also request a copy from your local vital records office or health department. This may take some time depending on the local government’s processing speed.

Online Services: Some states allow you to order death certificates online through websites like VitalChek. While these services may charge additional fees, they can be a convenient option for distant family members.

B. How Many Copies Are Needed?

It’s advisable to obtain several certified copies, as you will likely need to provide a copy to the insurance company, banks, creditors, and other financial institutions.

Step 3: Complete the Claim Form

Once the insurance company is notified and you’ve obtained the death certificate, the next step is to fill out the insurance company’s claim form, also known as a “request for benefits” form. This is an official document that you’ll submit to formally initiate the claims process.

A. What Information Is Required?

While specific forms may vary depending on the insurer, most claim forms will ask for:

Personal Details: Your full name, contact information, and your relationship to the deceased.

Policy Information: The life insurance policy number and any associated details.

Beneficiary Information: This section will ask for your Social Security number or Tax Identification Number (TIN) to verify your status as a beneficiary.

Payment Preferences: Some insurers allow you to choose how you’d like to receive the death benefit. Options include a lump-sum payout, installment payments, or a retained asset account (more on this later).

B. How to Submit the Claim Form

You can usually submit the completed claim form along with the death certificate either by mail or through the insurance company’s online claims portal, depending on their policies. It’s a good idea to make copies of everything for your records before sending the documents.

Step 4: Additional Documentation (If Needed)

In some cases, the insurance company may request additional documentation before processing the claim. This is especially true if the insured passed away under unusual circumstances or if there are questions regarding the policy. Examples of additional documents may include:

Medical Records: If the death occurred within the first two years of the policy (also known as the contestability period), the insurer may request medical records to verify that the insured did not provide inaccurate information when applying for the policy.

Accidental Death: If the policyholder died due to an accident and had an accidental death rider on the policy, the insurer may ask for an accident report or autopsy results.

Step 5: Choose How to Receive the Death Benefit

Once the claim is approved, you’ll need to decide how you’d like to receive the life insurance payout. Most insurers offer a few different options, and it’s essential to choose the one that best suits your financial situation and needs.

A. Lump-Sum Payment

The most straightforward option is a lump-sum payment, where the insurance company pays the full death benefit in a single transaction. This is the most common option because it allows beneficiaries immediate access to the funds, which can be used to cover funeral expenses, pay off debts, or invest for the future.

B. Installment Payments

Some insurance companies allow beneficiaries to receive the death benefit in installments over a set period. This option provides smaller, regular payments rather than a single large payout. It can be helpful for beneficiaries who want to manage the funds over time or reduce the risk of spending the entire amount too quickly.

C. Retained Asset Account

A retained asset account is a financial account set up by the insurance company, where the death benefit is deposited. Beneficiaries can access the funds using checks or a debit card, similar to a bank account. This option gives beneficiaries flexibility while allowing the remaining balance to continue earning interest.

Step 6: Receive the Payment

Once the insurance company has received all necessary documents and your claim has been approved, they will disburse the death benefit according to your selected payment method.

A. How Long Does It Take to Receive the Payout?

The time it takes to process a life insurance claim can vary depending on the insurance company, the type of policy, and whether any additional documentation is needed. However, most claims are processed within 30 to 60 days. If the death occurred during the policy’s contestability period or involved unusual circumstances, the process could take longer, as the insurer may investigate the cause of death.

B. What to Do if Your Claim Is Delayed

If your claim is taking longer than expected, don’t hesitate to follow up with the insurance company. Ask if any additional documents are needed or if there are any issues causing the delay. In rare cases where a claim is denied, you may need to consult an attorney to review the policy and ensure that you’re not being unfairly denied benefits.

Step 7: Using the Death Benefit Wisely

Once you’ve received the life insurance payout, it’s important to use the funds wisely. Life insurance money is often tax-free, so you’ll have flexibility in how it’s spent. However, it’s essential to prioritize immediate financial needs, such as:

Funeral and Burial Expenses: Covering the cost of the policyholder’s final arrangements.

Debts: Paying off any outstanding debts, such as a mortgage, credit cards, or medical bills.

Future Financial Security: Consider using the death benefit to create a savings or investment plan that provides long-term financial stability for yourself or your family.