A life insurance beneficiary is the person who can claim the death
benefit after you pass away.
You can name multiple beneficiaries and decide what percentage
they each will receive when you die. Additionally, you should add
contingent beneficiaries who will receive the death benefit if your
primary beneficiaries have died.
Not everyone names people as beneficiaries. Some people name
trusts. By creating a revocable living trust and naming it as the life
insurance beneficiary, you can ensure that the money is used
according to your wishes. For example, the trust money could be
used to take care of children.
If you decide to name a trust the beneficiary of your policy, make
sure to work with an attorney to structure the trust correctly. It’s also
wise to work with a financial planner so that a trust is part of your
larger financial plan.
It’s crucial to update and review your beneficiary selections regularly.
For example, life events such as a marriage or a divorce can impact
your selection.
To update your beneficiaries, contact your life insurer and submit a
change of beneficiary form. Making changes only on a will won’t
affect life insurance.
How Does a Beneficiary Make a Claim?
Claims can be paid quickly… assuming the insurer has all the
documents it needs. Don’t assume a life insurance company will
contact you. It’s unlikely they know that your relative died. While some
insurers are proactive in monitoring for insured customers who have
passed away, they won’t discover a death immediately.
Death certificate…
To start the claim process you’ll need to submit a certified copy of the
death certificate. The insurer won’t send it back. Therefore, you may
want to request a few certified copies if you need them for multiple
purposes.
Contact the insurance company right away…
While you may have a lot on your plate after a loved one passes away,
the sooner you contact the insurer, the sooner you can get the money.
Verify you have met all claim requirements…
Once all of the claim paperwork is done, make sure you have all
supporting documentation attached. This can include a claim form and
death certificate.
Claims are typically paid within 30 days after the insurer receives the
necessary documents. You don’t need an original copy of the life
insurance policy to make a claim. You only need to know the name of
the insurance company and contact them to initiate the claim.
A policy number is also very beneficial to expedite the claim.
That’s why it’s important to let your beneficiaries know that you have a
policy and tell them the name of the insurer. And insurers are contractually
obligated to pay only the people listed on the policy.
https://www.forbes.com/advisor/life-insurance/how-it-works/#22527ac27f30
Edited by H.C.
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