Life insurance proceeds are paid to named beneficiaries upon the death of the insured. Claims are typically paid within 30-60 days.
10 steps across 2 sections
1. Steps Process
- Locate all policies — Check: employer benefits, individual policies, mortgage insurance, credit card insurance, association memberships, veterans benefits.
- Contact each insurance company — Call the claims department and request a claim form.
- Submit claim form and death certificate — Complete the form and include a certified death certificate (each company needs one).
- Choose payout option — Lump sum (most common), installments, annuity, or retained asset account.
- Receive payment — Typically 30-60 days after submission.
2. Key Details
- Proceeds are generally federal income tax-free for beneficiaries
- Proceeds may be included in the estate for estate tax purposes if the deceased owned the policy
- Contestability period: Insurance companies can investigate and deny claims within the first 2 years of the policy (fraud, material misrepresentation)
- Suicide exclusion: Most policies exclude suicide within the first 2 years
- If no beneficiary is named, proceeds go to the estate (and through probate)
Pro Tips
- Search for lost policies at NAIC Life Insurance Policy Locator (eapps.naic.or...
- Check employer benefits department — group life insurance is common
- Do not accept an unsolicited offer to buy the policy — consult an advisor first
- If the claim is denied, appeal and consult an attorney