How to File a Life Insurance Claim

If a loved one has life insurance and passes away, their policy pays out a death benefit. The surviving beneficiaries would then have money to help cover final expenses, manage outstanding bills and replace the deceased's income.

To receive this money, you first need to file a life insurance claim. Here's what you can expect during this process, including how long it may take for a life insurance claim take to be paid.

What Is a Life Insurance Claim & How Does It Work?

A life insurance claim is how you notify an insurance company that someone covered by a life insurance policy has passed away. You must file a claim to collect the death benefit.

You fill out the insurer's required forms, including listing the policy number and the cause of the person's death. You also need to submit a death certificate as proof. The insurance company will review the claim information to confirm the person passed away and that they died from a covered cause. If all the details are in order, the insurer will then approve the claim and pay the beneficiary.

How to File a Life Insurance Claim

If you need to file a life insurance claim, expect to complete the following steps:

1. Contact the Life Insurance Company

The first step is to contact the company managing the life insurance policy. If you know your loved one worked with a specific financial representative, you could contact this professional directly for help. Otherwise, contact the insurance company's customer service department. Its representatives will explain the specifics of what you will need to submit a claim. They will also either provide or point you to the appropriate forms.

2. Obtain Certified Copies of the Death Certificate

The life insurance company will require a certified copy of the insured's death certificate for the claim. Life insurance companies generally will not accept photocopies. You must get a certified copy from the funeral director or medical professional who initially prepared the document. You could also request a copy from your local government records office.

3. Complete & Submit the Claim Paperwork

Next, complete a claim form for the life insurance company. While each company uses its own form, expect to include information like:

• The life insurance policy number
• The name and Social Security Number (SSN) of the deceased
• A short description of the cause of death
• Your information as the beneficiary receiving the death benefit, such as your name, address, SSN and relationship to the deceased
• How you would like to receive the death benefit

You then submit this completed form along with the death certificate. You could submit it by mail, but most insurers also accept claims online.

4. Wait on the Claim Approval

The life insurance company will review your claim form and the death certificate. It could also investigate the cause of death to ensure it's covered. After approval, the insurance company will send you the death benefit according to your chosen method.

What Documents Are Required?

Typically, the certified copy of a death certificate and the claims form are the only documents required to file a life insurance claim, though some insurers may accept a copy of the death certificate. It's still a good idea to provide a certified copy from the organization that prepared it: the funeral home or medical professional. You could also request a certified copy from your local government record office.

You may not need to submit a copy of the life insurance policy as long as you can provide the policy number. However, many insurers still require submission of either the original policy contract or affidavit of the lost contract.

Finding the actual policy contract for yourself is still a good idea, though. That way, you can look up the specific details about how the life insurance works, including the size of the death benefit.

What If You Can't Find the Documents?

If you can't find the documents needed for a claim, here's how to track them down, depending on what you need:

• If you don't have the life insurance policy number and contract but know the insurance company, you could call its customer service department. They can provide the information you'll need for the claim.
• If you don't know which insurance company your loved one worked with, try looking through their mail for a bill or letter from the insurer. You could also search the deceased's bank statements for records of insurance premium payments. If you still need help to find a lost life insurance policy, the National Association of Insurance Commissioners offers an online tool to search for missing policies.
• If you are missing the death certificate, contact your local records office. You should be able to request a copy if you are an immediate family member of the deceased: spouse, parent or child. If you are not an immediate family member, you could request a copy by proving you need the document for a life insurance claim. You'd need to show a letter from the insurance company saying you are the beneficiary of a policy and require the death certificate for a claim.

How to Determine the Death Benefit Amount

The face value of a life insurance policy is the death benefit that goes to the beneficiary. This is usually the policy's original death benefit. The contract should list the death benefit. You can also find this information on a recent statement or bill from the insurance company.

It is possible that the insurer could adjust the death benefit depending on the contract terms, the type of life insurance and how the deceased managed the policy. Some policies include extra benefits to pay more than the original death benefit. For example, a contract might have a rider saying it pays double the death benefit if the deceased died in an accident. In addition, if the deceased owed unpaid premiums or had an outstanding cash value policy loan, the insurer would deduct this from the death benefit. You would receive the remaining amount.

The death benefit could also be split between multiple beneficiaries. It depends on the instructions set up by the policyowner. For example, if the proceeds are designated to be split 50-50 between you and another person, you would receive half the death benefit payment.

Contact the insurance company to find out the exact death benefit. You could also try logging into the deceased's online account with the insurer to see the most up-to-date information for the policy.

How Are Life Insurance Claims Paid?

When you file a life insurance claim, you choose how you want to be paid the death benefit. Your options include:

• A single lump sum: You can receive the entire death benefit in one payment. The insurer will send you a check or direct deposit the payment into your bank account. This is the quickest and simplest option.
• Installment payments: You could also split the insurance death benefit into installments. For example, you could get 10 equal annual payments over the next 10 years. Installments could help you budget the money.
• Annuity payments: An annuity turns a large sum into future income payments. You could set up an annuity that creates income for the rest of your life. If that sounds appealing, you could use the life insurance death benefit to set up an annuity with the insurance company.
• Interest only: When grieving, it can be hard to figure out what to do with a large death benefit. If you'd like more time to decide, you can ask the insurer to hold onto the funds. The insurer will pay you interest during this time. When you're ready, you can make a full or partial withdrawals of the death benefit.

The payout options depend on the insurer. Not all of these may be available, or there could be other life insurance settlement options. You'll see what's available when you fill out the claim paperwork.

Do You Owe Taxes on a Life Insurance Claim?

You don't owe income taxes for collecting on a life insurance claim. However, the government could charge estate taxes on life insurance payouts. This is a tax on the transfer of property at death. The estate tax only applies to the extremely wealthy at the federal level.

In 2024, someone can pass along up to $13.61 million in property, including life insurance payouts, without owing estate tax to the IRS.¹ However, 17 states and Washington D.C. also charge an estate or inheritance tax. The state limit can be much lower depending on where you live and where the deceased passed away.

If estate taxes apply, the executor processing the deceased's will has to figure out how much is owed. They will then deduct this amount from the deceased's property before sending out the rest of the inheritance.

In most cases, life insurance is not taxable. If you're worried about possibly owing estate or inheritance taxes, you could wait until you've determined the final bill before spending the insurance money.

How Long Does a Life Insurance Claim Take?

Life insurance companies typically process claims quickly. If everything is in order and the life insurance company has no reason to investigate or deny the claim, it could pay the death benefit within three to five business days after you file.

If the life insurance company needs more time to investigate the cause of death, it could take several weeks or months to complete the life insurance claim process. An insurance company might need this extra time if there's a possible issue with the claim. For example, the insurer suspects the deceased omitted a known pre-existing health issue when applying for the policy.

How Long Do You Have to File a Life Insurance Claim?

Typically, there is no time limit for filing a life insurance claim after the death of a policyholder. As long as the policyholder was covered by life insurance when they died, the insurer must cover the claim according to the contract terms.

What happens if the beneficiary doesn't claim the life insurance benefit? Insurance companies regularly check state records to determine whether a policyholder has passed away. If they discover a policyholder has died, the insurer should try to contact the beneficiary listed in the contract. If the insurance company cannot find the beneficiary and you don't file a claim, the insurance company could send the money to your state's unclaimed property fund. You could then file a claim with this government agency to get your money.

What Could Cause a Life Insurance Claim to Be Denied?

An insurance company can deny a claim; however, they can only do so for specific reasons. If the deceased stopped paying premiums and lost their life insurance coverage before passing away, you would no longer be able to file a claim.

Life insurance covers most causes of death. However, there are some specific situations when it does not, known as exclusions. For example, if the policyholder died while causing a crime, the insurer could deny the claim. The insurer could also deny the claim if the deceased committed suicide within two years of buying the policy, provided that was established in the contract.

If the policyholder misrepresented the truth on their application and died within two years of buying the policy, the insurer could investigate whether the misrepresentation was related to the cause of death (for example, if the applicant hid an illness that led to their death). If the lie mattered, the insurer could deny the claim. The insurer could also deny the claim if the policyholder died from a dangerous hobby they didn't report when applying, such as skydiving or race car driving.

If your life insurance claim is denied, you will receive a notice saying why. You could appeal if you disagree and show why the denial was incorrect. For example, if the insurer says the person stopped paying premiums, you could show the bank statements proving they did. You could also hire a lawyer to take the insurer to court for payment, or submit a complaint to your state's insurance department if you feel that a claim was denied in error. However, claim denials are rare and only apply to the specific exclusions listed in the contract.

Getting Ready to File a Life Insurance Claim

While the life insurance claim process isn't long, it can be difficult when you're struggling after the loss of a loved one. For more information and support on filing a claim, contact a financial representative from the insurance company that issued the policy. They can help make sure you submit everything properly so you can get paid as soon as possible.

Sources

1. IRS provides tax inflation adjustments for tax year 2024. https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2024.