The Claims Process

Many people obtain life insurance and understand that the benefits might not necessarily be for them rather for their loved ones who will suffer the loss of the policy holder and might fall into a less than desirable financial situation because of it. Here we will discuss the claims process so that those who have to file for a claim know exactly what to do and aren’t held up by any unnecessary red tape.

For simplicity sake we will assume that you are claiming on the insurance policy because the policy holder has died and you are the beneficiary named in the life insurance policy. The very first step upon the confirmation that your policy holder is dead is to obtain the original death certificate and make copies of it. The copies should be certified true by a commissioner of oaths or a lawyer. These certificates will be used for further processes later.

The next step is to call the insurance agent that your loved-one worked with in order to get the ball rolling. The insurance agent should help with all the necessary forms that need to be filed to the insurer. It is not uncommon for the process of filling the forms to the point of actually getting the money take a month or more.

One tip that can be imparted at this moment is to never have your life insurance papers put in a safety deposit box. It is normal practice for banks to actually seal access to the safety deposit boxes upon the death of the owner and not release the box until 2-3 months after the death. This will add unnecessary amounts of stress on the beneficiary and can lengthen the process substantially.

When you submit the claim to the insurer you must also specify how you want the proceeds to be given to you. Sometimes the policy holder may have even specified how the claims are to be distributed to the beneficiary. The most common method that the claim is distributed is when a lump sum is given out to the beneficiary. Another increasingly popular method is to have specific income provisions to the beneficiary where the insurer is instructed to pay you a certain percentage of the principle and any accumulated interest at a predetermined schedule, normally monthly.

There are also other payment options such as keeping the principle from the claim at a financial institution and live off the interest accrued or even opt to have the amount wholly invested with the returns re-invested and only paid out at a much later date.

All up the process especially the paperwork can be a bit daunting however with the proper steps and appreciation for the use of an insurance agent, the process can be made much smoother.