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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/

 

 


 

 

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