If you're the beneficiary of a life insurance policy, it's important that there are no delays in the handling of your life insurance claim. Fortunately, most life insurance companies are very quick in expediting death claims. As long as the required paperwork is in order and the policy isn't being contested, a life insurance claim can often be paid within 30 days of the death of the insured. However, each claim is different and there may be state regulations that require additional processing time.
Life insurance payout process
Several factors can impact the payout process. It’s important to contact the life insurance company as quickly as possible to initiate the payout process and avoid unnecessary delays.
The life insurance company walks through several steps in the payout process. They locate the policy and evaluate that it is still in force and in good standing. They will also evaluate the claim to ensure that the claim is not fraudulent. As a regular part of the process, the company will also investigate the insured’s cause of death to ensure that the cause of death was not due to an excluded cause (for example, participation in a high-risk sport depending on your contract details).
The life insurance company will verify that all the proper documentation has been provided and ensure that applicable state laws are followed in the payout process.
Factors that may affect when benefits are paid
The amount of time it takes to pay a death claim depends on many factors, such as the insurance company's processing procedures and how quickly the necessary claim documents are received. And while every state has separate rules regarding the maximum amount of time a life insurance company can take to process a death claim, most life insurance companies will pay a claim sooner as long as they have what they need.
The death certificate
There are certain actions that you can take as the beneficiary to help avoid delays and to get your life insurance claim paid just as soon as possible. First, is providing proof the insured person is deceased by way of a death certificate. Keep in mind that every life insurance company requires an original death certificate — not a copy — so be prepared to produce this critical piece of documentation. If multiple life insurance policies are involved, you'll want to request several original copies for each insurer.
We understand that having to file a death claim after a loved one dies isn't easy. However, by notifying the life company and filing a claim as soon as possible, the claim process can begin more quickly. Fortunately, most life insurance companies have designated claim specialists who can walk you through the process and help answer any questions that you may have. These specialists work exclusively on death claims and are there to help avoid any undue delays. Once the claim is open, you'll have peace of mind knowing that the process has started and you can turn your thoughts toward other things at this very emotional time in your life.
The contestability period
The first two years after a policy is issued is known as the contestable period. If a claim is filed during this time, the life insurance company has the right to review the medical records of the deceased to ensure that no misrepresentations or inaccuracies were made on the insurance application. You could experience a delay in your claim if the insurance company decides to review this information.
There can be several situations resulting in the later payment of a life insurance claim. However, most delays can be attributed to incomplete information and improper documentation at the time of the claim. If you experience a delay in benefits, contact your insurance company right away to determine the cause.