How does a Life Insurance Claim Work?

Knowing how a life insurance claim works can be vital to receiving the benefit in a timely manner. In the event of a death, a life insurance claim must be filed expeditiously and certain documents are usually required to accompany the claim. These documents may include a copy of the policy along with a certified copy of the death certificate. Part of filing the claim is specifying your choice of settlement.

Settlement Choices

One popular settlement choice is a lump sum payment. This choice issues full payment of the benefit at the time of claim. Your payment can be deposited into a money market mutual fund or you can have the insurer hold the funds at an interest rate. The funds can be issued to the beneficiary at a later date.

Another option is to have the funds issued at a certain amount over a period of time. The payout of this plan includes both principal and interest, over a specified period of time.

Lastly, there is the life income option, which pays income for life to the beneficiary. This is dependent on the amount of the benefit and the age of the beneficiary at the time of death of the insured.