May 7th, 2012 | Author: Mitch Reynolds

Paying Out Your Life Insurance Claim

The process should go smoothly for a life insurance claim

Once a loved one has passed away, you will need to fill out the paperwork for their life insurance claim. This should never be a painful or tedious process. It should go easily and smoothly so that your family can receive the money they are left, fulfilling the wishes of the deceased.

A life insurance claim should be the fastest and easiest way to receive cash flow after a person has died. The death benefit is paid directly to named beneficiaries, avoiding taxation and probate, and not being tied up in the processing of the will. Here are some tips to help make the process quick and smooth, and get your life insurance claim paid quickly.

Make sure your loved ones know where your policies are

If you have a life insurance policy, you need to make sure your loved ones/beneficiaries know where the policy is. If you died, you won’t be around to find the policy in your filing system or to retrieve it from the bank safety deposit box you haven’t told anyone about.

If your beneficiaries, like your spouse, know where the policy is they can easily start the process of making a claim. The policy number is printed there, plus the contact information of the insurance company’s customer service and claims department. Step 1 – your beneficiaries need to get a hold of your policy to make a claim.

Contact your insurance broker first

Secondly your beneficiaries should contact the life insurance broker or agency who sold you the policy to see if they can help. This might not be so easy. Your insurance broker might have sold you the policy decades ago, and he or she might be retired or deceased themselves. But, there should still be someone looking after the policy. If you have kept up with your local life insurance broker over time, and have updated the contact information on your policy, you will easily be able to contact the office of an insurance broker who can help.

Your life insurance broker can speed up the process by getting your the claim forms, notifying the life insurance company of the death, and even helping the beneficiaries complete the life insurance claim forms properly so that there is no delay in paying the death benefit.

The insurance company’s life insurance claims department

If you can’t locate your life insurance broker, or it is required for the beneficiaries to go directly to the life insurance company (required by some companies) you will have to phone the claims department directly. The contact info for the insurance company’s claims department is printed inside the policy, or can easily be found by calling the customer service centre of the insurance company.

You will have to give them the policy number and name of the deceased. They will open a file and inform you how the claims process will proceed. It usually includes completing the claim forms and proper identification of all beneficiaries making a claim (so that cheques are paid to the right people).

Getting the death certificate and completing the paperwork

In order for the life insurance company to process the claim, they need some type of proof of death. In Canada this is easy because your local funeral home will issue you a stack of death certificates once they receive the body of the deceased. These death certificates are your proof of death to be attached when making a claim.

If you happen to die outside of Canada, proof of death is a little harder. There might be a time delay if you have to wait for the body of the deceased to be repatriated to Canada (having the body delivered back home for burial). If the deceased is not being repatriated to Canada, the insurance company needs to be notified of death abroad and they will inform the beneficiaries of what proof of death certificates they would require to process the claim.

Once you have the death certificate, all beneficiaries making a claim (if there is more than one beneficiary, each one needs to complete a claim form) will have to submit claim forms with proper identification. The insurance company will need to make sure that they are paying the death benefit to the proper beneficiaries to avoid a major mistake. You life insurance broker can really help here, making sure you complete the documentation correctly.

Your life insurance claim should be paid within 2 weeks

Once the life insurance company receives the claim forms and death certificate, they will quickly process it through their claims department. If all life insurance claim forms are in order, and the death certificate is verified, the cheques for the death benefit are process within about 1 week. A cheque payable directly to each beneficiary is issued and delivered to your life insurance broker or mailed directly to the beneficiaries. The proceeds of a life insurance death benefit are tax free for the beneficiaries, so you won’t need to declare the income on your taxes.

Connect with a broker you can trust

If you no longer have a life insurance broker looking after your policies, we can connect your with a local broker in your area who can be your insurance advisor and ultimately help out when there is a life insurance claim. Contact us today.

The article was written by +Mitch Reynolds. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about a life insurance claim would be very much appreciated.