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Losing a loved one is a huge emotional burden and
can also be a tremendous financial burden on surviving family members.
The loss of someone you love affects all types of insurance policies,
but the most important type is life insurance if the deceased is
covered by a policy. Aside from life insurance, you should
make sure that the deceased's remaining insurance policies are properly
disposed of.Does the deceased's auto or health insurance policy
cover any family members? If so, those family members will
have to obtain a policy on their own or they may be able to continue
the coverage but drop the deceased. Contact the insurance
companies for detailed information on each policy.
If the deceased has a life insurance policy(s), you
should obtain the policy(s) itself and look for a few critical pieces
of information such as a policy number, beneficiary(s), coverage
amount and contact number for the insurance company or agent. The
beneficiary(s) should contact the insurance company or agent and
make them aware of the death so that they can send a claims form.
The form asks basic questions such as the cause, place and date
of death. When filing a claim, the insurance company will also require
an original copy of the death certificate.
Once the claim has been filed and approved, the insurance
company will give the beneficiary(s) a number of settlement options
(if the policyowner has not already selected one) which may include:
- Lump Sum Payment - The
death proceeds of a life insurance policy are paid to the beneficiary(s)
in one lump sum payment.
- Fixed Period Payments - The
death proceeds of a life insurance policy are paid to the beneficiary(s)
for a fixed period.
- Life Income with Installments Certain -
The death proceeds of a life insurance
policy are paid to the beneficiary(s) in installment payments
through a certain period. After the certain period, payments will
continue to be made throughout the beneficiary's lifetime but
the payment may vary from the payments during the certain period.
- Interest Payments - The
death proceeds of a life insurance policy remain with the insurance
company and the company pays the beneficiary interest payments.
- Fixed Installments - The death proceeds of a life insurance policy are paid to
the beneficiary(s) in fixed installments until the proceeds and
interest on the unpaid balance of the proceeds are exhausted.
- Single Premium Annuity - The proceeds of a life insurance policy are used to purchase
a single premium annuity from the insurance company.
Before selecting an option, the beneficiary should
give careful consideration to their current and future financial
needs. Once all of the paperwork for the claim has been submitted
and the death benefit option is selected, the benefit should be
distributed within one to two weeks.
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