If there’s more than one beneficiary, each person needs to complete a claim form. You’ll need to submit a copy of the death certificate with your claim. Keep copies of all your documents and follow the policy’s claims process for a quick payout.
What you can expect after filing a claim
To ensure prompt settlements, the insurer must pay you no less than 8% interest starting from the date of death. An additional 3% is payable on claims it doesn't settle within 90 days of when you provided proof of death.
When the claim is paid, an insurer sets up an interest-bearing account in the beneficiary's name called a Retained Asset Account (RAA). This account works like a checking account. Typically, the insurer will issue the beneficiary a checkbook. You have the following payout options with your retained asset account:
- Single, lump-sum payment: You can write a check for the full amount and take your payout as one, lump-sum payment.
- Installment payout: You can choose a fixed monthly, quarterly or annual payment for a set period or until the account runs out.
- Interest-only payout: You can choose to get paid interest from the account monthly, quarterly or annually. When you die, the money in the account can be passed on to your beneficiaries.
Life insurance contestability period
If you file a claim during the first two years of the policy, the insurance company will conduct an investigation. This is to find out if the policyholder left out important information from their original application, such as a recent cancer diagnosis. If they did, the company will likely deny the claim, regardless of the policyholder's intent.
Reasons a claim can be denied
Read your policy carefully. A life insurance policy can include exclusions if the policyholder's death occurs due to:
- War (declared or undeclared)
- Military service or service in civilian forces
- Suicide within two years from the policy issue date (does not apply to group life policies)
- An airplane accident (per conditions specified in your policy)