Tier One: A Guide to Filing a Life Insurance Death Benefit Claim and Understanding the Process

This month’s blog answers a question we remain surprised that very few of our consulting clients ever ask:  How do life insurance policy beneficiaries receive the death benefit?   We find we need to proactively answer this question as part of any client engagement since, functionally, it is the final step when it comes to owning a life insurance policy.

This guide will walk you through the steps beneficiaries must take to file a life insurance death benefit claim, what the insurance company does once the claim is submitted, how and when payouts are typically made, and what options and rights you have as a beneficiary.

Step 1: Locate the Life Insurance Policy

The first step is finding out if the deceased had an active life insurance policy. If you already know the insurer’s name and have a copy of the policy, that’s ideal. If not, check the deceased’s financial documents, including bank statements for premium payments or employer benefits packages that may include group coverage.

Still unsure? Use tools like the National Association of Insurance Commissioners’ Life Insurance Policy Locator Service, or check with the decedent’s past employers or state insurance department.

Step 2: Gather Key Documentation

To initiate the claims process, you’ll need:

• The policy number (if available)

• A certified copy of the death certificate

• The deceased’s full legal name and Social Security number

• The claimant’s information: name, address, date of birth, relationship to the insured, and Social Security number

  
  

Get multiple copies of the death certificate. You may need to submit originals to more than one institution, including life insurers, banks, retirement plan providers, and others.

Tip: Avoid keeping the policy in a safe deposit box, as boxes are often sealed temporarily after death, potentially delaying access.  Asking your law firm to store a copy can speed up the claims process.

Step 3: Contact the Insurance Company

You can either:

• Call the insurer’s claims department directly

• Start a claim online through the insurer’s website

• Work with the insured’s broker or agent, who can help facilitate the process

Most insurers provide downloadable claims kits, which guide you through completing the claim form and outline what documents you’ll need. There may be separate kits for individual beneficiaries and those claiming on behalf of trusts, estates, or businesses.

Step 4: Submit the Claim

The claim form, often called a “Request for Benefits”, must be completed and submitted along with the death certificate and any required supporting documentation. Submission options typically include:

• Online portal (if available)

• Email or fax

• U.S. mail (traditional paper submission)

  
  

Once submitted, insurers begin their internal review process. Most companies will contact you within 5–10 business days if more information is needed.

Step 5: Choose a Payout Option

Beneficiaries generally have several choices for receiving the death benefit. Common options include:

1. Lump Sum. This is the most straightforward and common method. You receive the full payout at once, with no taxes owed in most cases.

2. Specific Income Provision. The benefit is distributed over a fixed time period, along with interest.

3. Life Income Option. The insurer provides guaranteed payments for the rest of your life, based on the benefit amount and your age and gender at the time of the insured’s death.

4. Interest Income Option. You receive interest earned on the death benefit. The principal remains intact and is distributed to a secondary beneficiary upon your death.

5. Annuity. This option offers regular income payments for a specified duration or for life but may reduce your flexibility to access funds in the future.

A crucial piece of advice:  consult a financial advisor before selecting your payout method, particularly if the benefit is large or your financial needs are complex.

Step 6: Wait for Approval and Payout

Assuming no complications arise, most life insurance companies process death claims within 7 to 30 days of receiving complete documentation. Payouts can be issued by check, direct deposit, or into a Total Control Account (offered by some insurers), which acts like a high-yield checking account with optional debit card access.

Understanding Beneficiary Rights and Challenges

Your Rights as a Beneficiary

• You have the right to know the policy amount and the claim decision.

• You may examine the documents used in evaluating the claim.

• You can file an appeal if a claim is denied and request a written explanation for the denial.

• You are entitled to choose your payout method.

  
  

Potential Challenges

1. Policy Lapse. If the policy lapsed due to nonpayment of premiums, there may be no benefit to claim.

2. Contestability Period. If the insured passed away within 1–2 years of policy issuance, the company may investigate for material misrepresentation or suicide, both of which may limit or void the payout.

3. Outstanding Loans. For permanent policies with cash value, outstanding loans at the time of death may reduce the benefit.

4. Incorrect or Outdated Beneficiary Info. If the named beneficiary has changed (or should have), disputes may arise. Minors named as beneficiaries may also complicate distribution, requiring a court-appointed guardian or trust.

5. Claims on Behalf of a Trust or Estate. If the beneficiary is a trust or estate, you’ll need additional documentation—such as proof of your authority as trustee or executor—and may face delays if legal paperwork isn’t in order.

What If You Can’t Find the Policy or Are Denied a Claim?

If you believe you’re a beneficiary but can’t locate the policy or were denied a payout, take the following steps:

• Use the aforementioned Policy Locator Tool through the NAIC

• Contact the state insurance commissioner

• Retain a life insurance attorney to help review your case

• File an appeal with the insurer or take legal action, if necessary

  
  

Be Organized

While filing a life insurance death claim is often straightforward, delays and denials can happen. Beneficiaries who are organized, proactive, and equipped with the right documents will find the process far smoother. Use the waiting period after filing the claim to consider your financial goals and consult with your advisor to determine how best to use the benefit.  The death benefit is a final act of care from someone who wanted to provide for you.

At Life Insurance Strategies Group, we do not sell products.  We help our individual and institutional clients make decision involving complex life insurance transactions.  Visit us at www.lifeinsurancestrategiesgroup.com.