Term Life Insurance Articles
What To Expect A Term Life Insurance Claim To Look Like
2011-07-21
A term life insurance claim is necessary for a proper payout on a policy, but the qualities of a term life claim can vary depending on the insurer and the laws of the state where the term life insurance policy was issued. A California term life insurance claim might be slightly different than a claim in another state, for instance, but understanding the basics of a term life claim can be useful when choosing a policy.
To file a term life claim, a beneficiary must contact the insurance company and file the proper paperwork, which is generally very simple. A death certificate is usually the only legal document that's absolutely required. Once the right paperwork has been received, a life insurance company will send a check equal to the value of the policy and documents summarizing the end of the policy. These documents should be kept, as they can be important, but they contain general information related to the payout; in most cases, beneficiaries will never use these documents after receiving the payout, as term life insurance benefits are usually not taxable. There are exceptions to this, so a record of a policy can be important for beneficiaries, especially if a policy is identified by the IRS as an investment rather than an insurance policy. An insurance agent can usually help in explaining the difference, and term life insurance policies rarely fall under the "investment" heading.
The amount of time that a life insurance company has to make a payout may vary by state. California term life insurance policies are usually paid out within 30 days, for instance, unless the life insurance company has an appropriate and legal reason to delay payment, such as an investigation into the cause of death. This may occur if the insured dies within the first two years of a policy. If the policy is older than two years, most life insurance companies will pay out as soon as they receive a proof of death via an official death certificate. Most life insurance companies will not ask for more information from the beneficiaries, but again, this can vary depending on the situation. It's important to stay in contact with a life insurance company throughout the claims process to ensure a fast, hassle-free payout.
Term life insurance buyers should ask their agents to explain the claims process before purchasing a policy, as this can weed out potential complications and give a good idea of what to expect in a claim. However, most term life insurance companies actually make the term life claim process easy, so it shouldn't be a burden on family members or other claimants except in complex insurance situations.
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A term life insurance claim is necessary for a proper payout on a policy, but the qualities of a term life claim can vary depending on the insurer and the laws of the state where the term life insurance policy was issued. A California term life insurance claim might be slightly different than a claim in another state, for instance, but understanding the basics of a term life claim can be useful when choosing a policy.
To file a term life claim, a beneficiary must contact the insurance company and file the proper paperwork, which is generally very simple. A death certificate is usually the only legal document that's absolutely required. Once the right paperwork has been received, a life insurance company will send a check equal to the value of the policy and documents summarizing the end of the policy. These documents should be kept, as they can be important, but they contain general information related to the payout; in most cases, beneficiaries will never use these documents after receiving the payout, as term life insurance benefits are usually not taxable. There are exceptions to this, so a record of a policy can be important for beneficiaries, especially if a policy is identified by the IRS as an investment rather than an insurance policy. An insurance agent can usually help in explaining the difference, and term life insurance policies rarely fall under the "investment" heading.
The amount of time that a life insurance company has to make a payout may vary by state. California term life insurance policies are usually paid out within 30 days, for instance, unless the life insurance company has an appropriate and legal reason to delay payment, such as an investigation into the cause of death. This may occur if the insured dies within the first two years of a policy. If the policy is older than two years, most life insurance companies will pay out as soon as they receive a proof of death via an official death certificate. Most life insurance companies will not ask for more information from the beneficiaries, but again, this can vary depending on the situation. It's important to stay in contact with a life insurance company throughout the claims process to ensure a fast, hassle-free payout.
Term life insurance buyers should ask their agents to explain the claims process before purchasing a policy, as this can weed out potential complications and give a good idea of what to expect in a claim. However, most term life insurance companies actually make the term life claim process easy, so it shouldn't be a burden on family members or other claimants except in complex insurance situations.
