Term Life Insurance Articles
Three Reasons A Term Life insurance Benefit Payout May Be Delayed
2011-04-05
When someone owning a term life insurance policy dies, the term life benefit due to be paid out to the policyholder's listed beneficiary should, under normal circumstances, be released almost immediately. Once a claim is made and upon receipt of a proof of death, this should generally occur within a two-week period of time. There are, however, certain factors that may delay the process, sometimes up to several months or more.
For a term life insurance policy that is written to cover only accidental death or one with a double indemnity clause that doubles the amount of the payout in the event of accidental death, an investigation will usually be launched by the insurer in order to determine the definite cause of death. While the law usually requires insurers to complete such an investigation and make a determination within a 30-day period, if irregularities are uncovered this time limitation can normally be extended for an additional 30-day period.
Some policies disqualify suicide as a cause of death for which claims benefits will be paid, particularly during the first two years the policy is in force. Any insurance company investigation will usually concentrate on determining whether suicide was the cause of death or if said death was made to appear as a suicide. All of this can take time and, as a result, a term life benefit payout may be delayed.
Any disputes to a term life insurance policy benefits payout, sometimes brought forward by family members of the deceased who have been excluded, may also cause the payout to take much longer than would normally be expected. One way to alleviate most of the delays mentioned above is for the insured to make sure he or she has written out a Last Will and Testament and that this document includes precise instructions as to how benefits from any in-force life insurance policies should be handled.
It's also important for someone taking out a life insurance policy to inform the listed beneficiary of said policy, to let them know that they are the named beneficiary and to reveal where the policy itself can be found in the event a claim needs to be made. For proof of the insured's demise a copy of the Death Certificate must be acquired and submitted to the insurance company to facilitate a claim. Failure to obtain the Death Certificate in a timely fashion can also cause delays in the payout process.
Although the topic may seem morbid to many, it's important to make sure your term life insurance policy works as planned. After dutifully paying premiums regularly, sometimes for years, you want the process to work smoothly and just as expected.
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When someone owning a term life insurance policy dies, the term life benefit due to be paid out to the policyholder's listed beneficiary should, under normal circumstances, be released almost immediately. Once a claim is made and upon receipt of a proof of death, this should generally occur within a two-week period of time. There are, however, certain factors that may delay the process, sometimes up to several months or more.
For a term life insurance policy that is written to cover only accidental death or one with a double indemnity clause that doubles the amount of the payout in the event of accidental death, an investigation will usually be launched by the insurer in order to determine the definite cause of death. While the law usually requires insurers to complete such an investigation and make a determination within a 30-day period, if irregularities are uncovered this time limitation can normally be extended for an additional 30-day period.
Some policies disqualify suicide as a cause of death for which claims benefits will be paid, particularly during the first two years the policy is in force. Any insurance company investigation will usually concentrate on determining whether suicide was the cause of death or if said death was made to appear as a suicide. All of this can take time and, as a result, a term life benefit payout may be delayed.
Any disputes to a term life insurance policy benefits payout, sometimes brought forward by family members of the deceased who have been excluded, may also cause the payout to take much longer than would normally be expected. One way to alleviate most of the delays mentioned above is for the insured to make sure he or she has written out a Last Will and Testament and that this document includes precise instructions as to how benefits from any in-force life insurance policies should be handled.
It's also important for someone taking out a life insurance policy to inform the listed beneficiary of said policy, to let them know that they are the named beneficiary and to reveal where the policy itself can be found in the event a claim needs to be made. For proof of the insured's demise a copy of the Death Certificate must be acquired and submitted to the insurance company to facilitate a claim. Failure to obtain the Death Certificate in a timely fashion can also cause delays in the payout process.
Although the topic may seem morbid to many, it's important to make sure your term life insurance policy works as planned. After dutifully paying premiums regularly, sometimes for years, you want the process to work smoothly and just as expected.
