How Long Do Beneficiaries Have to Claim a Life Insurance Policy?

Updated

One in 600 Americans is the unknowing beneficiary of a forgotten or misplaced life insurance policy, according to Consumer Reports. The average unclaimed death benefit is $2,000 but can reach as high as $300,000. Could you be one of the many life insurance beneficiaries that haven’t yet filed their claim? 

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Maybe you’re not sure how to even begin the process of collecting the life insurance payout. Or perhaps you’re uncertain as to whether the insurance company will still honor the claim since months or years have passed. Those are all valid concerns, and we have the answers below. 

Is There a Time Limit to Claiming a Life Insurance Policy?

Life insurance beneficiaries can file their death benefit claim any time, providing the policy was active at the time of their loved one’s passing. Life insurance policies typically spell out the timely filing expectations.

Time limits for life claims are more specific to the insurance carrier. You see, the insurer must abide by their policy terms and state laws. This often means an insurance company must pay a death claim within 30 days of its approval. 

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How Do Beneficiaries Claim a Life Insurance Policy?

Below are the simple steps you’ll need to take to collect your life insurance payout. 

Step 1: Contact the insurance company

If you are (or suspect you are) the beneficiary of a life insurance policy, then you’ll have to get in touch with the insurance company. Preferably you’ll want to contact the insurer shortly after the insured has passed away. Insurance companies vary as to their claims process. Some offer online claim forms and others prefer notification via phone. 

You can bet the life insurance company will ask for more information about your deceased loved one. Be prepared with the departed insured person’s:

  • Full legal name 
  • Date of birth 
  • Date of death
  • Cause of death 
  • State of residence
  • Policy number
  • Social Security number

Even if your loved one’s agent contacted the insurance company, you should also reach out to the insurer. 

What happens if you believe you’re the beneficiary of a life insurance plan but don’t have the policy? Don’t panic. You aren’t the first person to be in this situation. The National Association of Insurance Commissioners (NAIC) has a policy lookup tool on their website that’s meant to find records of a life insurance policy or annuity contract. 

Step 2: Gather important documents

You’ll need to gather three very important documents: policy documents, death certificate, and claim form (aka “request for benefits”). The policy paperwork is mostly for your reference while the other forms are necessary for claims processing.   

In addition, some insurers will ask for an obituary or death notice, as well as proof of your identity. 

Step 3: Submit your claim

Based on the insurer’s directions, you’ll either complete a paper claim form and mail that to the insurance company, or you’ll fill out an online claim form via the carrier’s website. Either way, you’ll most likely need to include an original death certificate. This is to be sure there’s no fraud involved before releasing the funds. 

What Could Slow Down a Life Insurance Policy Claim?

Generally, life insurance payouts generally take anywhere from one week to 60 days. Below are a few reasons why you may experience a delay. 

Life insurance claims backlog

Occasionally insurance companies face a small claims backlog, which can delay the processing of your claim. Insurer backlogs can happen for different reasons, like staffing shortages and/or an influx of claims. However, it’s unlikely that such a backlog would add more than a few extra days to your claims processing.

Contestability clause

Life insurance includes a contestability period during which the insurer can investigate and deny claims. Most states allow for a two-year contestability period, while others allow for a one-year timeframe.

If your deceased loved one passed away during this contestability period, then you should expect the claim will be investigated, causing a delay. The insurance company will investigate the deceased person’s insurance application to make sure the policy wasn’t issued based on false information. This review could take anywhere from six months to 12 months.

Missing documents

Not having all the correct documents available is the most common reason for claim delays. Often claimants don’t send the insurer an original death certificate. The insurance company then puts the file on hold and asks you to send them an original. 

Cause of death

Life insurance policies usually come with a list of exclusions when it comes to the manner of death. Typically, insurers won’t pay out claims if the deaths were caused by suicide, alcohol or drug overdose, or an illegal act. In addition, life insurance carriers often exclude deaths caused by a high-risk activity like skydiving or mountain climbing.  

If your loved one passed away under one of the above situations, you can still submit a claim. However, you should be prepared for the insurer to perform a full investigation including a review of the deceased person’s autopsy. This means your claim will be in limbo for quite a while. 

If your family member was killed, the insurance company will hold the death claim until the homicide investigation is complete. This is because the insurer must be confident the beneficiary (you) didn’t cause the death. Anyone that intentionally causes the death of an insured will not legally be allowed to collect the life insurance proceeds. 

Beneficiary disputes

From time to time, questions will pop up regarding the beneficiary, which can delay the issuing of the death benefit. 

Below are a few of the most frequent beneficiary disputes: 

  • Insured recently changed the named beneficiary 
  • The beneficiary is an ex-spouse
  • The sole beneficiary is deceased
  • The beneficiary is a minor child
  • The beneficiary can’t be located

Ask the life insurance company if you’re listed as an “irrevocable beneficiary.” An irrevocable beneficiary can’t be changed.

Insurer went out of business

If your loved one’s insurance company went out of business, rest assured the money is still available. State insurance regulations require carriers to hold the funds in reserve for these situations. Associations will pay all or part of the claim, if necessary. 

What Could Speed Up a Life Insurance Policy Claim?

Keep reading for more tips as to what, if anything, you can do to speed up the life insurance claim process. 

Be accurate and thorough

An easy way to avoid claim delays is to fill out all paperwork accurately and completely. For example, submitting an incomplete claims form will cause the insurance carrier to track down the missing information. 

It’s a good idea to have your insurance agent review the paperwork you’re going to submit before you do. There’s no charge for this type of assistance, and it could be beneficial in getting paid quicker. You can call the insurance company directly and ask a claim representative for guidance, too. 

Submit original, certified death certificate 

Always send the insurance company an original, certified death certificate. As we mentioned, this is the most common reason for delays in death benefit payouts.  

If you don’t have an original death certificate available, you’ll have to request one from the funeral home, the attending physician that signed the death certificate, or your local vital records department. It’s worth putting in the extra effort on your end before the claim is submitted. This way you can expect a quick turnaround and payment.

Contestability period expired

Remember, the contestability period is a maximum of two years from the date the coverage went into effect. If you’re submitting a claim beyond the two-year timeframe, you shouldn’t have any worries. The claims process should be relatively fast. 

There’s No Time Limit on Love

Hopefully, you now better understand how to collect your loved one’s beautiful financial gift, quickly and easily. Although you’re going through a difficult time, following our tips for collecting a life insurance benefit will help you receive the payout timely. 


Source: 
  1. How to claim an unclaimed life-insurance policy,” Consumer Reports, February 2013, consumerreports.org
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