A lot of people realize the value of having a life insurance policy. Not only will it help keep your long-term financial planning in check, but it’s also a way to ensure that your family has assistance dealing with your matters when you depart this plane of existence. To make sure that you’ll get the most out of this option in the long run, you have to know the rules, requirements and regulations backwards and forward. You also want to know how the life insurance payouts are administered to the beneficiaries, so you can most accurately plan and choose the best option for your unique situation.
When to Expect Benefits
When the insured person has passed on, it’s up to the beneficiary to file a death claim with the insurance organization. You’ll have to include a death certificate and other necessary paperwork and some states allow for as many as 30 days to pass for the review of a death claim. After the claim has been reviewed, they’ll either pay out the beneficiary, deny the claim or ask for additional information to get further clarification on certain details. Most of the insurance companies will pay out a claim within 30 to 60 days, but you can bet that they’ll try and be as quick about it as possible: they can incur hefty interest charges for delays associated with paying out claims.
There Could Be Issues along the Way
There are several factors that come into play that could place further delays on life insurance payouts. If the insured person dies within two years of the policy’s issue date, there’s a contestability clause that exists to make sure fraud or foul play aren’t possibilities for the death of the insured person. Most policies have this contestability clause and the benefits are generally paid out after a thorough investigation has been done to be sure that the insured didn’t lie on their original application. There’s also a suicide stipulation that can cause benefits to be denied if the insured commits suicide within the first two years of the policy.
If homicide is noted as the cause of death, you can be sure that the insurance company is going to do a full investigation of their own to be see that no beneficiary is a suspect in the crime. If the beneficiary does so happen to be a suspect, the benefits will be held until they are acquitted or all the charges have been dropped.
There’s Lots of New Payout Options
The “lump sum” payment has always been the default way for life insurance payouts to be administered, but the passing of time has allowed for even more ways to get paid. In recent times, the installment or annuity life insurance payouts options came into play. If you want to make sure that the funds from life insurance payouts last for a while, you might choose this option to avoid blowing through the cash. This option can ensure that you keep a steady income coming through for a number of years that you determine.
You would be able to choose how long the money was to potentially last you with this option.
There’s also the possibility of pre-death compensation. This is true of those patients that might suffer from terminal and chronic disease and illness. This allows for drawing against the policy at face value to cover the costs of overwhelming expenses or important treatments.
This is also unique in the sense that it allows the policyholder to also act as beneficiary.
How to File a Claim
You want to make it a point to file a claim with the insurance provider as soon as possible once the insured has passed on. Of course, there will be paperwork to complete and a certified copy of the certificate of death must be submitted with that paperwork. You can go through the county to get this copy and if they died in a hospital or nursing home, that certificate might have been completed there. You also have to submit a statement of claim in most cases, which is also known as a “request for benefits”, and it must be signed by the beneficiary.
If there’s a revocable or irrevocable trust involved, the insurance company should have documentation about the policyholder and the beneficiary to avoid confusion.
At the end of the day, life insurance and life insurance payouts create a sense of security for both the deceased and the beneficiary. When the policyholder passes on, it goes without saying that they’ll be things they left behind unattended to whether it be bills or costs associated with a funeral. The beneficiary doesn’t have to worry themselves with how to best go about these things when there’s money available for them to use to handle it. As long as you’re clear, accurate and concise when dealing with the life insurance payouts department, you shouldn’t run into any major issues along the way.