Term Life Insurance Articles
Understanding The Claims Process For Term Life Insurance
2011-08-31
For beneficiaries, submitting a term life claim can seem like a complex and stressful process. Fortunately, this usually isn't the case. While losing a loved one is always difficult and stressful, term life insurance helps to keep a family financially protected. The claims process for term life insurance is easy to understand and involves contacting an insurance company, submitting proof of the policy holder's death and waiting for a payment.
A term life claim is essentially a very simple process. An insurance company will request proof of loss documentation, which usually consists of an official death certificate. The certificate is sent to the term life insurance company, and under most circumstances, this will be all that the insurer needs to process the claim and to send out a payment. Payouts on term life insurance claims are usually issued within a few days, or in rare cases, within a few weeks. The amount of the payout is determined by the life insurance policy--it won't always be the face value if there are special provisions such as double indemnity. State insurance commissions set laws that prevent term life insurance companies from taking too long when paying out claims without a valid reason.
Term life insurance companies will rarely contest a claim provided that the death of the policy holder occurred outside of the contestability period of the life insurance contract. Contestability periods are put in place if an insurance company finds evidence of misrepresentation or if there's a chance that a policy holder purchased a policy knowing that he or she would die (due to suicide, a dangerous occupation, etc.). A contestability period is usually two years long, after which a noncontestable clause takes effect. This prevents an insurance company from contesting a claim even if there's evidence of misrepresentation, although noncontestable clauses are subject to certain terms which are outlined in an insurance contract. As long as a death occurs outside of this two year period, claims will usually be honored as long as they're submitted in a timely manner.
Beneficiaries need to be aware of the procedures in place to protect them and they need to understand how to submit a claim. Term life insurance buyers should talk to their beneficiaries and insurance agents about the claims process, as this is the best way to ensure that claims are handled appropriately after a death. Beneficiaries sometimes don't know where to start. By having a frank discussion and by giving them a contact to call after the death, policy holders can gain tremendous peace of mind from the knowledge that the claim will be handled correctly.
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For beneficiaries, submitting a term life claim can seem like a complex and stressful process. Fortunately, this usually isn't the case. While losing a loved one is always difficult and stressful, term life insurance helps to keep a family financially protected. The claims process for term life insurance is easy to understand and involves contacting an insurance company, submitting proof of the policy holder's death and waiting for a payment.
A term life claim is essentially a very simple process. An insurance company will request proof of loss documentation, which usually consists of an official death certificate. The certificate is sent to the term life insurance company, and under most circumstances, this will be all that the insurer needs to process the claim and to send out a payment. Payouts on term life insurance claims are usually issued within a few days, or in rare cases, within a few weeks. The amount of the payout is determined by the life insurance policy--it won't always be the face value if there are special provisions such as double indemnity. State insurance commissions set laws that prevent term life insurance companies from taking too long when paying out claims without a valid reason.
Term life insurance companies will rarely contest a claim provided that the death of the policy holder occurred outside of the contestability period of the life insurance contract. Contestability periods are put in place if an insurance company finds evidence of misrepresentation or if there's a chance that a policy holder purchased a policy knowing that he or she would die (due to suicide, a dangerous occupation, etc.). A contestability period is usually two years long, after which a noncontestable clause takes effect. This prevents an insurance company from contesting a claim even if there's evidence of misrepresentation, although noncontestable clauses are subject to certain terms which are outlined in an insurance contract. As long as a death occurs outside of this two year period, claims will usually be honored as long as they're submitted in a timely manner.
Beneficiaries need to be aware of the procedures in place to protect them and they need to understand how to submit a claim. Term life insurance buyers should talk to their beneficiaries and insurance agents about the claims process, as this is the best way to ensure that claims are handled appropriately after a death. Beneficiaries sometimes don't know where to start. By having a frank discussion and by giving them a contact to call after the death, policy holders can gain tremendous peace of mind from the knowledge that the claim will be handled correctly.
