Three Things That Beneficiaries of Life Insurance Need to Know

By on October 31, 2013

Insurance claims advice

There are more types of insurance than most people realize. Here is just a small sampling

  • Life
  • Travel
  • Car
  • Home
  • Renters
  • Health
  • Pet

Did you know that you can even have kidnap and ransom insurance? The point is that with so many different forms of protection, and so many different lifestyles, not everyone will be familiar with how each type of insurance works.

Take for example life insurance. About 93% of families believe it is incredibly important to have life insurance, but only three out of 10 households are actually insured. Unfortunately, your first introduction to life insurance claims could be because a relative has passed on, and has named you as a beneficiary of their life insurance. Here is what you need to know.

What is an insurance claim?

A claim, whether it is a life insurance claim, or a car insurance claim, serves the purpose of requesting from the insurer a sum of money to cover loss or damages. The average driver makes one claim every 17.9 years here in the United States, and for an SUV, that claim is usually $3,800 on average. When you have car insurance and you get into an accident, you request to the insurer that they provide you with the funds to fix the damages. When a person dies, the process is a little bit different.

How do I got about making an insurance claim?

If you need to make a life insurance claim, then it is because someone who had life insurance named you as their beneficiary, meaning that you are the person who was designated to receive the money in the event of their death. In some cases, you might be a beneficiary and not even know it. If someone close to you has died and you cannot confirm whether or not they had life insurance, you can find out by contacting the American Council of Life Insurance.

Once you know that a policyholder named you as the beneficiary, you will contact the insurance company to let them know that the policyholder passed on, and that you need to make a claim. There will be forms to fill out and sign, and you will need to attach proof of death, which is usually a death certificate. Claims can be paid out within a few days, or may take up two months, depending on whether the company denies the claim, or if there is a delay due to missing information or forms. Your next step will be to decide on a way to receive the claim, whether it be by lump sum, installments, or as a deposit.

Where can I find insurance claim advice?

If you are not sure how to receive a life insurance claim, whether a lump sum or installments would be better, then you could look for claim advice from a financial advisor, bank, trusted family member with some financial or insurance knowledge, or from the insurance company itself. It is important to understand the process as you move through it to ensure that you receive the benefits as the policyholder intended, so that you can cover the cost of their funeral, pay off their debts, and replace lost income. Because this guide only covers basic information, it would be wise to seek further professional claim advice.

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