No one wants to think about what might happen after the death of a loved one – but if you are the recipient of a beloved life insurance plan, it is a good idea to understand how the life insurance payment process works.
Many people do not realize what they need to do to claim a death benefit, for example – and if you depend on that money to help you cover your loved one's final expenses, pay medical bills or make your next mortgage, is It's a good idea to know exactly how long it can take to get a life insurance payment from a beloved life insurance company.
How long does it take to receive money from a life insurance death benefit? In most cases, it does not take very long to get a life insurance payment ̵
How do life insurance payments work?
Before you can receive a life insurance payment, the life insurer must be made aware of the policyholder's death. Someone who is associated with the policyholder must submit a death claim to the life insurance company.
"Anyone can report a death and file a death claim," said Jeff Butcher, Digital Life Claims Consultant at Haven Life's parent company, MassMutual. "A beneficiary, a friend, a relative, even a lawyer." Most life insurance death claims, including Haven Life's death claims, can be filled out online. The person submitting the death claim must find and provide a copy of the death certificate, which is often the most time consuming part of the process – but life insurance companies are ready to work with you to make the death claim as easy to complete as possible. "You can send us a photo of the death certificate from your phone," Butcher explains.
Once a death claim has been submitted, the life insurance issuer will reach out to all listed beneficiaries. "We express our condolences, explain the [life insurance payout] process, and ask if they have any questions," Butcher said. If a life insurance company needs additional information from listed beneficiaries, such as an updated address or bank account information, they collect it during these calls.
How long does it take to get a life insurance payment?
How long does it take to get life insurance money? "If everything is in order, we can pay off the claim immediately," Butcher explains. Haven Life, for example, aims to pay all qualified claims within 24 hours of receipt.
Most life insurance payments are distributed as tax-free one-off payments. This means that if you are the sole beneficiary of a $ 500,000 life insurance policy, you will receive a full $ 500,000 at a time. If the death benefit is shared between several beneficiaries, each named beneficiary will receive their percentage of the life insurance payment.
How long does it take to get your life insurance payment from your life insurance company? Many life insurance companies send life insurance payments directly to a recipient's bank account via electronic transfer (EFT). Some life insurance companies still send your life insurance payment in the form of a checked item, although it is becoming less common these days.
Because life insurance payments can be large, some banks may hold your benefits for between 24 and 48 hours before depositing them into your bank account. Think about it if you know that you will receive a life insurance death benefit and not spend any of your life insurance payment until your bank has successfully validated the transaction and given you full access to the funds.
What factors can delay your life insurance payment?
There are some reasons why it may take longer than expected to get your life insurance payment. For example, if a life insurance company has trouble finding a beneficiary, it may take longer to complete the payout process.
"That's why it's important to update your beneficiary information," Butcher said. If you are a life insurance policyholder, it is important to keep your police information as current as possible. For example, if your adult child is a beneficiary of your life insurance, make sure you update your insurance every time your child moves to a new address. With Haven Life, updating your beneficiary information is as easy as logging in to your online account – so do not postpone it!
It's also a good idea to include a conditional beneficiary in your life insurance – just in case something happens to your primary beneficiary. "If the primary beneficiary dies before the insurance is paid out, the life insurance benefit goes to the conditional beneficiary," Butcher explains. "If there is no conditional beneficiary listed, the payment is paid by default in the farm."
Many policyholders list a minor child as either a primary or conditional beneficiary – but they do not realize that a minor will have a death. benefit, they must also appoint an executive guardian or guardian. This guardian will receive the death benefit for the minor and ensure that the money is handled successfully until the child reaches the majority age. "This is the easiest way to ensure that a minor receives his or her life insurance payment," says Butcher.
There is another reason why a life insurance payment may be delayed – and it has to do with what is called a competition claim. If a life insurance policyholder has reason to suspect that a policyholder lied on his application (for example by not disclosing an existing illness or by not acknowledging regular tobacco use), the life insurance company will dispute the claim and initiate an investigation into the nature of the policyholder's death. Depending on the outcome of the investigation, a competition claim can either delay or eliminate your life insurance payment altogether – but most people do not have to worry about competition claims affecting their life insurance payment.
How long does it take to get a life insurance payment? Rest assured that most life insurance companies want to make it as easy as possible for you to get your life insurance money – and thanks to digital claim forms and electronic bank transfers, the whole process can take as little as a few days. Think of it as an advantage to an affordable life insurance policy.