Protecting your loved ones after death has been made easier due to life insurance companies offering specific policies that will allow you to pay a premium fee on an annual or monthly basis. As a result of this, your loved ones will be entitled to a lump sum pay out when you eventually pass on. But how does life insurance work after your death?
What Happens To Your Life Insurance Once You Die?
Once you sadly pass away, your chosen beneficiaries will be eligible for a life insurance pay out as a result of your life insurance pay out. Typically, this amount will be the total specified on your life insurance policy documentation. In order to claim the funds, your beneficiary must submit a claim to the insurance policy with proof of your death- usually in the form of a valid death certificate. Once all of the requested evidence has been submitted, the insurance policy will review the claim you have made to check for validity.
In most cases, the life insurance pay out deposited will remain tax free. However, estate tax may be taken from the final total if you, the deceased person, has estate taxing that require settling after your death.
Who Gets Your Life Insurance Pay Out When You Die?
When you decide to purchase a life insurance policy you will be required to list individuals on your policy who will receive your pay out when you pass on- this is known as your beneficiary. In the instance where you may wish to specify more than one beneficiary, you can opt to split the final pay out in equal percentages between multiple listed individuals. These nominated persons can be your family members, a spouse or a charity.
You must remember to keep your beneficiaries up to date at all times otherwise any discrepancies or false information could result in the insurance company having to pay your policy to your will or estate. Therefore, it is sensible to ensure that you are actively reviewing your life insurance policy on a regular basis.
How Long Does It Take To Get The Life Insurance Pay Out After Your Death?
There is no one specific time frame in which a final life insurance pay out is made to the recipients. Ultimately, the time varies from a few days to several weeks. As this is such a delicate process with lots of factors to consider, there are multiple reasons that life insurance pay out processing times can be increased considerably. These factors may include the cause of death, or the policy providers legalities and policy rules themselves.
As mentioned you may be able to benefit from the claim in a matter of days in the event of a straightforward case. More complex cases with more factors to consider will take longer to process.
When filing a claim, it is important to have proof of the policy holder’s death to hand to ensure you are not delaying to claims process. Once approved by the policy providers claims team, the pay out will be deposited in one lump sum.
Reasons A Life Insurance Claim Could Be Delayed
In some instances, a life insurance claim could be delayed by the following:
Issues filing the claim itself.
Verification of the policy holder’s death.
Investigation into the policy holder’s death.
Policy providers terms and conditions.
Missing documentation to verify the policy holder’s death.
Why Might A Life Insurance Policy Not Pay Out?
It isn’t always a straightforward process to claim a cash pay out for a life insurance policy if there are certain extenuating circumstances that could jeopardise your claim. These may include any of the following.
Suicide
A lot of life insurance policy holders will have clause in their policy to state that if the policy holder dies from suicide within one to two years of purchasing a life insurance policy, then the policy will not be paid out and will instead be terminated.
Policy Exclusions
There are a number of exclusions that could prevent a total life insurance pay out. These includes any pre-existing illnesses or health conditions such as cancer or heart disease, or a death that occurs from partaking in a high-risk activity, for example, climbing.
Misinterpretation or Non-Disclosure of Information
This includes not sharing the correct information with the insurance policy provider, or offering inaccurate information that misleads the company. Both of these lapses of information can result in your claim being denied completely.
Fraud
In some unfortunate circumstances, it has been known that life insurance policies have been susceptible to fraudulent activity. This includes attempts of fraud involving false claims, a death purposely caused by somebody else, or faking your own death. Each scenario is taken extremely seriously and can result in prosecution.
Lapsed Policy
A lapsed policy refers to a life insurance policy that has been terminated as a result of the policy holder failing to make monthly premium payments when required. If this is the case, the life insurance policy will no longer be valid, therefore resulting in any claims that are made being rejected and invalid for a lump sum pay out.
Why Choose Life Expert?
Life Expert are dedicated to assisting individuals with finding the best life insurance policy to suit their needs down to a tee. Whether it be a policy to cover your whole life, or a policy to cover critical illness, income protection or more, Life Expert will ensure that your beneficiaries receive the cover you wish for once you pass away- offering you maximum peace of mind at all times.
After all, knowing your family, spouse or charity are taken care off after you have passed on allows you to live your life in harmony knowing that the financial side of things is in good hands. No matter the length, or value of your policy, we will offer you high-quality customer service and guidance from start to finish.