A life insurance pay out is the money paid to your beneficiaries if you
were to pass away while the life insurance policy is in effect.
This is the process for how life insurance pays out and the steps you
need to take.
Locate the life insurance policy. If you can’t find the policy, contact
your life insurance agent, the company that issued the policy or the
human resources department of the company that sponsors the group
life insurance plan. If you’re still stuck, check out these additional tips
on locating a life insurance policy from the American Council of Life
Insurers. Two last resort options include searching the
NAIC Life Insurance Policy Locator Service or contacting MIB,
an insurance membership corporation that offers a
policy locator service for a fee.
Obtain a certified copy of the death certificate. Check with the state
or county where the policyholder passed away or with the funeral
director arranging services to get a copy.
Fill out a request for benefits. This is the claim form from the life
insurance company that you can get from the insurer or from your
life insurance agent.
Pick a payout option. You typically have two choices…
Lump sum: This option gives you the entire death benefit all at once.
Annuity: This option pays you the death benefit over a set number of
years. The benefit is invested during that time, leading to a higher overall
pay out (so long as you live long enough to collect the entire benefit).
Send the paperwork to your insurer. Do this ASAP to prevent any
delays. Make sure to also include a copy of the trust document if the
policy is owned by a trust.
At this point, your work is most likely done. You’ll simply wait until the
insurance company sends you the payout via check or direct deposit.
hat can take anywhere from a few days to several weeks. The insurer
or your agent can give you an idea of when to expect the life insurance
pay out.
There are, however, times when the life insurance payout is delayed.
Common reasons for a delay include…
The policy expired before the death occurred.
The policyholder was not current on paying premiums at the time
of death.
The death occurred during the contest-ability period.
The contest ability period is a window of time after a life insurance policy
is issued. Duringthis time, the insurer can investigate and deny claims.
The contest-abilityperiod typically lasts a year or two. It’s meant to protect
the insureragainst insurance fraud.
There is fraudulent information on the life insurance application.
An insurance company will always check to see if the information on the
life insurance application was truthful. If it wasn’t…say, the policyholder
died while skydiving and denied having any risky hobbies on his or her
application…the claim can be denied. It’s just not worth it to lie on your
life insurance application…plus, it’s a felony in every state.
The cause of death is homicide. The insurer will typically wait to make
sure that the beneficiary (or beneficiaries) are cleared as suspects before
green lighting the payout.
A licensed insurance agent can help you navigate the life insurance
payout process and answer any other life insurance questions you have.
The key is to start today.
Hayden Childs
Alabama Licensed Agent
(205) 269-1382
https://lifehappens.org/life-insurance-101/how-does-life-insurance-pay-out/
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