Skip to main content

111721 How does life insurance pay out?

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

Shcmail34@yahoo.com

www.haydenchilds.net

https://lifehappens.org/life-insurance-101/how-does-life-insurance-pay-out/

 

 


 

 

Comments

Post a Comment

Popular posts from this blog

022823 The 9 Benefits of Whole Life Insurance...

(1) Provide for Loved Ones…   It’s the basic need everyone thinks about. You have a young family. You are the major breadwinner. Something happens to you. How is Your family supposed to make ends meet? It’s a form of protection. Peace of mind.   (2) Key Man Insurance…   You and your partner own a business. It’s grown. Many employees Depend on you. If something happens to your partner, it’s likely their Spouse or family will inherit their share of the business. Cash would Be a lot more useful to them. Life insurance on both partners can Provide the cash to buy out heirs and keep the business intact.   (3) Emergency Loans…   Hopefully your client lives a long life. The whole life policy accumulates Cash value, eventually growing to the full face value, or beyond. Many Policies allow you to borrow money against the cash value. You would pay interest.   (4) Funding Estate Taxes…   Your client owns a farm. I...
Post a Comment
Read more

090921 Those Dying From Covid-19 Are Least Likely to Own Life Insurance...

Many companies have sharply reduced estimates of their exposure, as measured by payouts per 100,000 U.S. fatalities   As the number of U.S. corona virus deaths surpasses 200,000, public-health experts point to a series of missteps and miscalculations in the country's response. Here’s a look back at how the U.S. became the center of the global pandemic.   Sept. 28, 2020 5:30 am ET    U.S. life insurers are paying out far fewer Covid-19 death claims than initially expected, largely because the virus is disproportionately killing people with little to no insurance. In the past few weeks, many life-insurance companies have sharply reduced estimates of their exposure, as measured by payouts per 100,000 U.S. Covid-19 fatalities. Estimates have come down by an average of 40% to 50%, according to Credit Suisse stock analyst Andrew Kligerman.   Driving the rapid reduction in exposure are two groups… older Americans and minoriti...
Post a Comment
Read more

080822 Less Common Life Insurance Needs

On top of the most common reasons for buying life insurance, It can help cover some less common needs.   These could include…   *Insuring Children Buying a policy on a child can ensure that the family will financially Survive the loss of the child, but keep in mind that such a loss is Fairly unlikely. It can also ensure the child’s ability to qualify for life Insurance in the future. That could be helpful in the case of a health Diagnosis that might make it harder to pass the underwriting process.   *Replacing Retirement Benefits Life insurance is often marketed as income replacement for an Insured person during their working years, but some retirees may Choose to keep theirs after leaving work. It can be used to replace The loss of any retirement income for their spouse or any dependents.    *Investment Permanent life insurance can provide you with a potential income Source. You can access your cash value once it has buil...
Post a Comment
Read more