Life insurance is something that may prove to be very beneficial in unexpected situations. At the same time, many people don’t consider it when it comes to their financial planning, as they think it may not be necessary.
However, when a loved one passes away, leaving the entire family without any financial support, things can get tough. With life insurance, though, a sum of money will be paid when the policyholder dies, and the money goes to the family.
But will the payment be made in time, or will it be delayed? Read on to find out.
How Long Does Life Insurance Take to Pay Out?
The problem that many people find when it comes to life insurance is that the payout is not done soon enough. Generally, life insurance companies claim that the money will be given within a few days to one month. Having said that, most families are paid within the 30 days of the death of the insured. In happier cases, if all the documents are in order and the claim is straightforward, the money can be paid even sooner, in just 10 to 14 days.
Conversely, there are cases when the payment is delayed, thus leading to a lot of complaints, as well as people losing their trust in life insurance companies. A delay may occur for various reasons.
For instance, if the person died of lung cancer, but the insurer was told they did not smoke, a delay may occur. The reason is the fact that the insurer will start investigating the matter, so he makes sure whether the deceased was indeed a non-smoker, or the family was lying.
Still, you need to keep in mind that the exact amount of time it takes to receive the money depends on the laws in your state and the insurance company. Before signing up for life insurance, it’s always better to check the laws and the company, so you have a general idea of how much it is going to take.
Who Gets Life Insurance Payout?
Life insurance payout is given to the beneficiaries. Basically, when the insured signs up for the life insurance, he/she has to decide who will receive the money following their death. They usually choose close family members.
As such, when designating a beneficiary, you need to file out a financial and health questionnaire, as well as a possible medical exam. This is all part of the traditional life insurance application and approval process.
Choosing who is going to receive the money after your death is probably the most important aspect to consider. If you can’t decide, you could wonder who will suffer the most financial loss if you were to die and start from there.
How Is Life Insurance Paid Out to Beneficiaries?
If someone dear to you has died and they had a life insurance policy, you need to look for the policy itself in order to receive the payout. It might be a problem if your loved one didn’t tell you where it is, so you should start looking for it as soon as you can.
Once you find all the information that you need, you must file a formal claim with the insurer. Usually, this claim is found on their website, or you will be sent some paperwork to fill out. You will be asked for proof of the beneficiary’s identity, and you will have to prove who you are as well. Once this is done, the process will take some weeks.
After these weeks pass, you will receive the life insurance payout.
Life Insurance Payout Timeline
When the insurer dies, the family needs to look for the policy in question so they have the document that will help them get the life insurance payout. Once that’s done, the beneficiary has to contact the life insurance company, and they will have to fill out a form, either online or by fax.
The beneficiary will also have to prove their identity, as well as their relationship with the deceased, after which they will submit everything and wait a few weeks.
Unless there are some things that need to be investigated or some other factors delaying the process, the beneficiary will receive the payout in a few weeks, up to a whole month.
Life insurance may be helpful but having to wait for its payout is frustrating. However, if you have the required documents and you’re able to submit the papers in time, delays won’t be a problem.
Despite all of these, life insurance is definitely to be considered, especially if someone depends on the life of the insurer. It can be the much-needed financial support after the death of a loved one.
BGA Insurance Group can help you with all decisions involving life insurance, including taxable payout questions, benefit information, and selecting the right plan for your needs.
Please note – information on this page is subject to change based on a number of factors. Please contact us if you need direct assistance.