Life Insurance Types | Buying Life Insurance | Understanding Life Insurance | Glossary
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Collecting a Life Insurance Claim

One of the most common issues with collecting a life insurance benefit is that the beneficiaries have no idea how to start the process. With expensive funeral expenses and lost income, most people want to make sure they can receive their proceeds as quickly as possible. Unfortunately, the claims process does not always go quickly for everyone. Although, insurance companies have made filing and collecting a claim much easier over the years, it can still take several weeks or even months to finally collect on a policy.

Filing Your Claim

The first step to collecting the proceeds of a life insurance policy is initiating the process by getting in contact with the insurance provider. All it takes is a simple phone call, and some companies may even provide online support. After you've notified them of the death, the company will typically send you claim forms and other important documents to fill out. Yes, be prepared for a significant amount of paperwork here, but it's all necessary to complete the process. Once all of the paperwork has been submitted, the insurance provider can get started in processing the claim. At this point, the insurance company is simply making sure the claim checks out and that the policy is still in good standing. Depending on the circumstances of the insured individual's death, some life insurance providers may choose to investigate the claim, especially if it's still during the contestability period.

Contestability Period

The contestability period refers to an approximately two year time frame after the life insurance policy is purchased. If a claim is made while the policy is still in its contestability period, life insurance companies will typically launch an investigation into the claim, checking for any fraud or deception. Insurance providers realized that some individuals were buying life insurance policies in poor health and misrepresenting themselves during the application process. While their insured's family was probably happy to collect the benefit, these fraudulent claims were costing insurance companies money, which of course caused life insurance rates to increase as well. The investigations of claims in the contestability period can often take many months, as they may be waiting on important medical or police records from the insured individual's death. Should the company find anything fraudulent in their investigation, they may withhold the policy's proceeds from the beneficiaries. Don't worry, as long as you're completely honest on your life insurance applications, you're loved ones will have no trouble collecting their benefit, even if it's during the contestability period. Just keep in mind that the claims process simply cannot be completed overnight and your beneficiaries may have to wait several months to collect on the policy.