How Long After Death Do You Have To Claim A Life Insurance Policy?

Insurance companies have their own rules for paying out death benefits and knowing them can help you prepare and ensure you get your claim when you need it.

Here’s what to expect when you’re ready to claim a life insurance policy.

How Long After the Policy Holder’s Death Do You Have to Collect Life Insurance?

How Do You File a Claim?

If your loved one has a policy, you should know how to claim their life insurance in the event of their death.

It’s a simple process, but following it can make all the difference in how fast you receive the death benefit. When you need to file a claim, use these steps:

Once you file your life insurance claim, most insurance companies will pay out quickly.

Following the claim process correctly and promptly providing the necessary documentation will increase the likelihood of a faster payout.

Because most life insurance policies gain interest over time, companies want to issue the death benefit as soon as possible. But, on average, how long does it take for life insurance to be distributed?

Most insurance companies will issue the death benefit within two weeks of the policyholder’s death. You may have to wait up to 30 days for a payout, but you will usually receive it much sooner.

Why It Might Take Longer for Your Policy to Pay Out?

Documentation Discrepancies:

You may think you’ve submitted all the documentation you need, but given the circumstance, you might have missed something.

Check to make sure you filled out all forms completely, provided the original death certificate, and didn’t forget to send any necessary documents.

Backlogged Claims:

The issue may lie with the insurance company, not with you.

Insurance companies can experience a sudden influx in claims and fall behind on processing them. These delays mean that your payout also gets pushed back.

Contestability Period:

The contestability period typically encompasses the first two years after someone purchases a life insurance policy.

During this time, the insurance company can investigate claims to ensure the person did not commit fraud or lie on their insurance application.

This process can take extra time, which slows the payout process.

Rarely, an insurance company will withhold a payout from a beneficiary entitled to it.

If you believe your insurance company is wrongfully withholding benefits, consider talking to an attorney for help.

When you receive a lump sum life insurance payout, you may feel overwhelmed by the amount of money you suddenly have.

However, you should carefully consider how you want to use it and what course of action works best for you and your family.

Before you spend any of the money, think about:

Your financial future:

You don’t want to spend all the money from your lump sum payment at once. Create a specific account for this payment and don’t touch it for a while.

You may also consider using it to pay off the deceased’s debts or paying your own bills, especially if the loss of your loved one also comes with lost household income.

Creating a high-yield savings account:

A high-yield savings account allows the money to accumulate interest while saving it in case of an emergency.

Whether yours or your loved one’s debt, using your lump-sum payment to pay off credit card, mortgage, or other high-interest debt can help you use your regular income for other expenses.

Taking Action

When you’re ready to claim a life insurance policy, you shouldn’t have to wait long to receive the death benefit.

While some issues can arise that get in the way of collecting on the policy, you can talk to your insurance company to determine how to make things go smoothly.

If you have questions about how long after a loved one's death you have to collect their life insurance death benefit, leave us a comment. We're here to help.