Life insurance provides financial support to surviving beneficiaries when the insured person dies. The payment amount, called the death benefit, can help beneficiaries cover expenses, replace lost income, or boost savings.
While receiving an insurance payout isn’t complicated, it isn’t automatic either. If you’re a life insurance contract beneficiary or executor of an estate that involves a life insurance contract, you’ll need to file a claim to receive the death benefit. But how long does life insurance take to pay out, exactly? Here’s what you need to know.
How Long Does Life Insurance Take to Pay Out?
You can generally expect the insurance company to pay out a life insurance claim within a month or two after receiving it. It largely depends on the provider—you may receive a payout sooner.
However, the process doesn’t always go smoothly, sometimes delaying the payout. To avoid long waits and ensure a claim is paid as quickly as possible, it’s important to understand the claims process. You can also take steps to minimize the chance of payment delays.
How to File a Life Insurance Claim
Each insurer has its own requirements, but they all follow the same basic claims process. To file a life insurance claim, you need to take three steps.
1. Contact the Insurance Provider
Reach out to the company or agent that holds the policy. Inform them that the insured is deceased and you intend to file a claim. They’ll give you the forms you need to complete, either by hard copy or electronically. Fill out the required paperwork completely and accurately.
2. Obtain Copies of the Death Certificate
You’ll need to submit a certified copy of the death certificate with your application. The funeral director can help you navigate this process.
3. Decide How to Structure the Payout
Choose how you want to receive the payout. This may include a lump sum or periodic payout options.
After you take these steps, the insurance company will review the claim. If it doesn’t have any concerns or additional questions, it can approve the claim and issue payment.
Guaranteed Acceptance Life Insurance
Coverage options starting at $9.95 a month!
Guaranteed acceptance life insurance without medical exams, health questions, or rate increases.
Potential Reasons for Life Insurance Payment Delays
While most life insurance claims are paid fairly quickly and without much hassle, some situations can slow the process or cause problems.
Difficulty Contacting the Insurance Company
If you’re responsible for filing a life insurance claim for yourself or an estate, make sure you have the policy information before you need it. If you don’t have the policy details, knowing which insurer issued it can help.
Mismatched Names
It’s common for people to use variations of their legal names or go by their middle names. If the name on the death certificate doesn’t match the name on the life insurance policy, it may cause a payment delay while you verify the deceased and insured are the same person.
An Investigation Is Needed
In some cases, the insurer may need to investigate further before paying a claim. For instance, if the beneficiary was changed shortly before the insured died or the insured was murdered, the insurance company may want to ensure there isn’t fraudulent activity.
Difficulty Locating Beneficiaries
The life insurance company may not be able to identify who to pay. This can happen if the primary beneficiary listed on the policy has already passed and no contingent beneficiaries are named. It may take additional time to determine who should receive the payout.
Preparing to File a Claim
If you believe you’ll be responsible for filing a life insurance claim, you can prepare now. Verify that you have the appropriate documentation, address any potential discrepancies, and know how to contact all relevant parties before it’s time to file. Filing an accurate claim can help you receive the payout as quickly as possible.
For questions or additional information about claims and payouts, reach out to a Colonial Penn representative.
Colonial Penn is here for you!
Colonial Penn has specialized in making life insurance simple and accessible by offering it directly to consumers since 1957. Click here to learn more.
