How Will My Life Insurance Beneficiaries Get Paid When I am Gone?

Your family means everything to you.  You’ve worked hard to provide them with the best life you could while having peace of mind that should anything happen to you, they will be covered by the terms of your life insurance policy.  It is never easy to imagine our own death, but it is imperative that we plan for the day when we will not be there to take care of our loved ones. So how exactly will the people you have sacrificed for receive payment in the event of your passing and what steps can you take today to insure that your beneficiaries receive payment?  Let’s dig into the answers to those questions today. 

Step 1. Pay Your Premiums 

Whether you purchased insurance online through Nonmedlifeins.com or used with an agent, you will have worked out the details of your life insurance policy and had the terms of that policy explained to you.  In order for the policy (and the benefits) to stay valid, you must make sure to pay your monthly premiums and maintain its active status. Remember, term life insurance does not have cash value and must be active upon your death for the payout to your beneficiaries to be realized.  So the first step to making sure your family receives money is to Pay Your Premiums.  

To this end, when you are deciding which policy to purchase, pay attention to the monthly premium costs and make certain that they are an amount that you will be able to afford for the length of the term.  This may sound obvious but it is not uncommon for someone to purchase more insurance than they are ultimately able to afford. Remember, when your policy lapses and it is cancelled, you do not receive your money back.  So Pay your Premiums.

Step 2.  Tell Your Beneficiaries

This step is crucial for several reasons.  First and foremost, during an already difficult time for your beneficiaries, you don’t want them having to do detective work and dig around to find your policy.  Secondly, the process will be much smoother if your beneficiaries are able to provide your insurance claims department with the necessary information about your policy.  So be sure to tell your loved ones that you purchased a life insurance policy and provide them with copies of the details of the policy in the event of your death.  

Here is the information about your policy that will help your beneficiaries during that critical time:

Information About the Insured (You)

• Full Name 
• Life Insurance Policy Number
• Social Security Number
• Date of Death

Information About the Beneficiary

• Full Name
• Gender
• Date of Birth
• Social Security Number
• Contact Information
• Relationship to the Insured (Deceased)

Be sure to provide the information in the first set of bullet points to your beneficiaries.  Tell them to keep the information in a safe place as they might not need to access it for many years or decades (and hopefully longer!).  If you make changes to your policy, inform your beneficiaries so that they are not surprised by them later. 

These first two steps are all that you need to concern yourself during your lifetime.  After that, there are steps that your beneficiaries will need to complete in order to receive the death benefit from your policy.  We recommend letting your loved ones know about these steps when you provide them with the information about your policy. This will help avoid confusion during a time of distress.  

Step 3.  For Beneficiaries: Getting the Documents In Order

When the policy holder passes away, the beneficiaries should contact the insurance agency and provide the information about the policy and the deceased.  At this point, the beneficiary will receive a “Claimant” packet with necessary paperwork that will need to be reviewed and signed.  

Additionally, when returning the Claimant packet, they will also need to include a certified death certificate which is most often furnished by the funeral home or crematorium.  The certificate can also be retrieved through the state vital records office. The certificate will have a raised seal on the paper that verifies its authenticity.  

Step 4. Submitting the Paperwork

When the beneficiary has completed the Claimant packet and submitted it along with the certified death certificate, the only thing left to do is wait for the claim to be filed.  Typically, after making sure that everything is in order and that there are no reasons stemming from the policy that get in the way of receiving payment, the fastest claim is completed in 10 days although some may take longer depending on the circumstances of death.  At this point, the claim is approved and the beneficiary will receive payment in the manner in which they chose when completing the Claimant packet. This is most often in the form of a check or direct deposit in a lump sum to the beneficiary. Being a death benefit, this money is tax-free.  There are more ways to structure payment such as setting up a trust for a minor and others that are possible but not within the scope of this article.  

More Than Just a Policy

When purchasing life insurance online, you may think that the algorithm is doing all the work.  The truth is, there are agents behind each policy that will help your loved ones through the claimant process when you pass away.  They will do their best to serve the terms of your policy in an efficient manner so that handling the details does not add to the burden of the people you leave behind.  

Caring about policyholders means caring about their beneficiaries.  An agent’s job is to help them receive the money your policy has left for them so that they may live more comfortably because of your foresight and planning.  If you have any questions about your policy, please don’t hesitate to contact us.