Losing a parent can be one of life’s most challenging experiences. While it’s natural to focus on your grief, practical matters may need your attention, including concerns about their life insurance. It can be hard to navigate the ins and outs during such a difficult time.
That’s why understanding what to do when a parent dies can make this stressful and emotional time more manageable. Accordingly, it helps to prepare now. Knowing where to find their life insurance policy and how to file a claim can help you handle these important matters more confidently without taking away from the grieving process.
Here’s how to start planning now.
Understanding Your Parent’s Life Insurance Policies
When your parent passes, you’ll want to know what kind of life insurance policy they may own, if it’s still in force, and where you can find the documentation. Ideally, this is a conversation to have with them beforehand, especially if you’re discussing their end-of-life wishes. Then, you’ll already know the type of insurance and expected death benefit.
For example, your parent may have burial insurance, which covers all or a portion of their end-of-life costs and funeral. If they have a traditional whole life or term life policy, the death benefit may exceed the funeral costs.
Actions to Take after a Parent’s Death
It may be hard to concentrate on practical tasks immediately after losing a parent. However, the life insurance claims process can take time, so try to get started as soon as you can.
Within the First Few Days
Before submitting a claim, you’ll need some key documents. Start by requesting multiple copies of the death certificate—the funeral home can usually help arrange this. Having a few copies can help simplify your interactions with insurance companies, banks, and other financial institutions when managing your deceased parent’s legal affairs.
Within the First Few Weeks
You’ll also need to obtain a copy of the life insurance policy. Your parent may have multiple policies, such as one through work and another on their own. In that case, you’ll need both policies.
Your parent may have told you where to find the policies and related information. If they didn’t, you may need to begin searching. Other documents, such as financial records and bank statements, may provide information about the policy. If you still can’t find it, contact your parents’ former employer, accountant, or financial advisor.
The life insurance company may not tell you that you’re a beneficiary on the policy. So, confirm this information through your parent’s policy documentation.
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Give Yourself Grace
Amid the emotional stress of dealing with a parent’s death and gathering their financial documents, you can take steps to help make the process a bit easier.
Don’t Rush
Take time to grieve. Insurance can wait if you need it to.
Ask for Help When Needed
Trusted family or friends can help you with the process.
Contact a Professional
An estate planning attorney or financial advisor can help guide you through complex scenarios.
How to File a Life Insurance Claim
Once you have the proper documentation, it’s time to file a claim.
Contact the Insurance Company
You can find the company’s contact information on its website or in the policy.
Gather Documentation
You’ll need to give the insurer a copy of the death certificate. The insurer also provides claim forms, requiring information like your parent’s policy details and your personal information as the beneficiary. You may also need to choose how to receive the funds.
Account for Processing Time
Claims usually take a few weeks to process, but confirm with the insurance company for a more accurate timeline. If you’re experiencing financial hardship, it may be able to expedite the process.
In some cases, the insurer may take longer to investigate the death if it’s within the first few years of the policy or under suspicious circumstances. Your insurer can provide more details in these instances.
What to Know about Taxes
Life insurance death benefit payouts usually aren’t taxable for beneficiaries. However, if your parent didn’t name a beneficiary or they can’t be found, the proceeds may go to their estate. In that case, there could be tax implications as they go through the probate process. Speaking with a tax or estate attorney can help you determine your next steps.
Considering Your Own Insurance Needs
The death of a parent may have you considering your own insurance needs. Life insurance can help provide financial protection for your loved ones if the unexpected happens. The death benefit can help them cover your final expenses, pay down debt, and contribute to monthly bills like mortgage or childcare payments.
If you don’t have coverage or only have protection through work, consider a policy that meets your loved ones’ needs and fits your budget. Typically, coverage is less expensive when you’re younger and healthier, and you may be able to lock in a rate for decades.
As you shop around and compare quotes, consider how much coverage you may need and the insurance company’s reputation. Also, don’t be afraid to ask questions so you fully understand your options.
Should You Get a Policy for a Surviving Parent?
If one parent is still alive, you may want them to purchase new life insurance. However, their needs may depend on whether they’re the beneficiary of your other parent’s policy. If they aren’t, they may want a policy to help cover future burial expenses or give you financial support. Speak with them about their options.
Moving Forward after the Death of a Parent
Losing a parent is a significant event, often bringing deep grief and logistical challenges. Knowing what to do when a parent dies, including understanding the life insurance claims process, can help you manage these essential tasks more efficiently during a difficult time.
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