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Claiming a Life Insurance Benefit

Life insurance can provide your loved ones with the financial means to help pay for living expenses, funeral costs, or loans and other bills that are left behind. When the owner of a life insurance policy passes away, their beneficiary can receive a lump sum cash payment. But before the beneficiary can collect the money, they must first file a claim.

Understanding the Life Insurance Claims Process

On average, the claims process may take 1-2 months from start to finish. The process begins when a policy holder’s death is reported to the life insurance company. Often times, the beneficiary or next of kin would then have to fill out a claim form containing information about the insured and return it to the insurance company along with a certified copy of the death certificate. Once this information is received, an analyst evaluates the information and the claim is processed.
There are two types of life insurance claims. An incontestable claim is when the death occurs after the contestable time frame stated within the policy. Once the claim form and death certificate is submitted, an incontestable claim can typically be processed very quickly — sometimes shortly after filing the claim.

There are times when additional information is needed to process a claim. In most cases, this is known as a contestable claim. A claim is considered contestable if the insured’s death occurs within a set period of time of the effective policy date or any attached policies (riders, accidental death benefits, etc.). In the event of a contestable claim, the beneficiary might have to complete a medical release or authorization form, which gives the insurance company permission to gather information about the insured’s medical history from his or her doctor. Contestable claims often take a longer time to process than incontestable claims.

Just because a claim is contestable, doesn’t mean that it will be denied. Most of the time this just means the insurance company has to verify the information on the policy application. If the information on the application is accurate, then the claim is processed and the benefit is paid. A claim could be denied if the insured omitted something on the application that would have affected whether or not the policy would have been issued.

Paying a Life Insurance Benefit

Once a life insurance claim is processed and approved, the beneficiary listed on the policy will receive a payment for the benefit amount. And while there are several different options for structuring a life insurance settlement, benefits are typically paid as a lump-sum cash payment. Since your loved ones could depend on the financial support that life insurance can provide, it’s important to consider a company with strong financial ratings and a track record for paying claims. Policy holders should always check the leading independent rating services (A.M. Best, Fitch, Standard & Poor’s, and Moody’s Investors Service) to see a life insurance provider’s current ratings.


This article is provided by New York Life Insurance Company for informational purposes only. This article is not intended to provide tax, legal, financial or accounting advice. Please consult your own professional for advice specific to your circumstances.