Understanding how to collect the funds in a life insurance policy is rather simple. If you have never had to put a life insurance claim in before it can seem difficult. There is a lot of paperwork to be filled out and it is a waiting game sometimes. Insurers can question the legitimacy of a claim, which delays payout.
Full Face Value Paid Out
One of the benefits of having term life insurance is that the entire purchased policy amount is paid to the beneficiaries on the policy. You don’t lose anything and the family doesn’t have to worry about additional fees or items that may cause the value of the policy to decrease. The amount that is purchased is the exact amount your family receives.
Beneficiary Submits Claim form With Death Certificate
When the policy holder passes, the beneficiary must obtain the paperwork to begin filing the claim. Along with this claim must be a certified copy of the death certificate. The certificate must be properly documented, stamped and notarized for it to be deemed acceptable.
Without this, the claim is put on hold, taking more time before your family members will receive any funds. One of the good things about this is that funeral directors and hospitals will make note of the hold up and will not bother you for the funds much. They understand what you are going through but do also expect payment for services rendered.
Policies Must be Paid Up to be Paid Out
Here is one of the catches to term life insurance. If the policy holder is behind on payments or the policy is not paid up, the insurer is not required to pay out. If something like this occurs, it is important to open a dispute immediately. This can take up to 2 years to complete, at which time you’ll have to make payment arrangements with creditors, medical billing offices and of course, the funeral home.
Term life insurance is rather cut and dry. There are few clauses in place that would prevent a policy from being paid out. In the event that something occurs to slow down the payout of the policy, keep creditors informed. Although you have enough to deal with regarding the loss of your loved one, staying in contact with creditors is important and will reflect in credit reports. Some expenses fall on the responsibility of the next of kin, which can have a negative impact on your credit score.