Life insurance is most valuable to you during life's difficult times, which is why it's important to know in advance when and how to file a claim. Insurance companies are required to pay insurance claims promptly, but there are steps you or your loved ones will have to follow to receive the proceeds. Though the specific details will vary according to your policy, here are some general things to know:
Keep beneficiaries up-to-date. A common reason for a delayed claim is when policies are old and have outdated beneficiaries. Often, old policies name spouses, siblings, and even parents as beneficiaries. If the original beneficiaries have predeceased the insured, you'll have to round up a lot more paperwork to receive the insurance proceeds, and potentially create estate issues.
Read the claim instructions carefully and provide everything requested. One area in which many beneficiaries get tripped up is in the nitpicky details of filing the claim. If you don't fill out the paperwork properly or provide all the documents the insurance company requires, it could delay the payout. Remember, insurance companies will want their “t's crossed”and their “i's dotted”. Understanding the details and avoiding errors is critical to avoiding delays.
Understand the fine print. Every insurance policy has fine print. Life insurance policies may have contestability periods that give the insurance company the right to investigate a death and dig deeper into an insured's medical history. Don't worry too much. It's very rare for an insurance company to investigate a death, but it's still very important not to lie on an insurance application or misrepresent your medical history. Following the insurance companies guidelines will make the claim process much smoother.
Work with a professional. One of the many benefits of working with a qualified insurance professional is that we can help your loved ones navigate the process of applying for life insurance benefits. Typically, insurance companies rely on the family of the deceased to notify them of an insured's death and file a claim. If the family doesn't know about the policy, they may miss out on the benefits they deserve.
A financial professional can help you organize your financial life and help ensure that your family has expert help when they need it most. To request a complimentary life insurance review, please contact our office at (253) 327-1177.