How Long Does Life Insurance Take to Pay Out? The Claim Process

How long does life insurance take to pay out?

There is no single answer. The time it takes depends on three things: when the claim is complete, whether the insurer needs to review the death, and the laws of the state. A claim is "complete" when the insurer has everything it asks for, which usually means a claim form from each beneficiary and a certified death certificate.

Claims tend to move more smoothly when the policy has been in force for more than two years, the cause of death is clear, the beneficiary is alive and clearly identified, and the paperwork is complete. Each of the things in the next section can add time.

The insurer's claims department is the only one who can tell you where a claim stands. Ask for a claim number, and ask what, if anything, is still missing.

What can slow down a life insurance payout

• Missing or incomplete documents. A missing signature, an unsigned form, or a death certificate that still lists the cause as "pending" can hold up a claim.
• The contestability period. For about the first two years a policy is in force, the insurer may review the application. Washington State's Office of the Insurance Commissioner says that if you file a claim during the first two years of the policy, the insurer will investigate.
• Cause of death. Some policies exclude certain causes, and some deaths need an investigation before the cause is final.
• Beneficiary questions. A beneficiary who has died, a minor child, a former spouse, or more than one person claiming the money can add steps.
• Lapsed premiums. If premiums were not paid, the insurer must first check whether the policy was still in force.
• Graded or modified policies. Some burial insurance pays a limited benefit if death occurs in the first years. See graded death benefit.

Step-by-step: the life insurance claim process

1. Find the policy. Look for the policy, statements, or premium payments in bank records. If you cannot find it, see how to find a lost life insurance policy.
2. Contact the insurer. Call the claims phone number or visit the insurer's website. Give the policy number, the insured person's name, and the date of death. Ask for a claim packet.
3. Order certified death certificates. The funeral home can usually order them. See how to get a death certificate.
4. Fill out the claim form. Each beneficiary usually fills out their own form.
5. Choose how to receive the money. Many insurers offer a lump sum or other options. Some pay into an interest-bearing account that works like a checking account. Ask how each option works before you choose.
6. Send everything together. Keep copies of every page, and use a method that lets you track delivery.
7. Follow up. Ask for a claim number and the name of the person handling it. Write down every call.

Documents checklist for a life insurance claim

Insurers vary, but a beneficiary is often asked for:

• A certified copy of the death certificate. Some insurers accept other proof of death; ask.
• A completed claim form (sometimes called a claimant's statement) for each beneficiary.
• The policy number, or the original policy if the insurer asks for it.
• The beneficiary's ID, Social Security number and contact details.
• If the death was within the first two years, a medical records authorization may be requested.
• If the estate is the beneficiary, court papers naming the executor or administrator.
• If a minor is the beneficiary, papers showing a guardian or custodian.

Life insurance beneficiary rules

Life insurance is paid to the beneficiary named on the policy, not according to a will. A will generally does not change who gets the money from a policy with a living, named beneficiary. Key rules:

• Primary and contingent beneficiaries. The primary beneficiary is first in line. If no primary beneficiary is alive, the contingent (backup) beneficiary is paid.
• More than one beneficiary. The money is split as the policy says. Each person usually files their own claim.
• No living beneficiary. The money usually goes to the policyowner's estate and passes through probate.
• Minor children. Insurers generally will not pay a large amount directly to a child. A court-appointed guardian, a custodian under state law, or a trust may be needed.
• Former spouses. Some states have laws that can affect a former spouse named on a policy after divorce, and employer plans can follow different federal rules. If this applies, ask the insurer or an attorney.
• Assignments. A beneficiary can usually assign part of the payout to a funeral home to pay the funeral bill. See life insurance for funeral costs.

State prompt-payment laws

Many states have laws that set a deadline for insurers to pay a life insurance claim once they have the proof they need, and require interest if they pay late. The details, including when the clock starts and the interest rate, differ by state.

Example: Vermont. Vermont law (8 V.S.A. § 3665b) says a life insurance claim must be paid within 30 days after the insurer receives a properly executed proof of loss, with interest from the date of death at the rate the insurer pays on proceeds left on deposit or 6%, whichever is greater. This is one state's rule, shown only as an example.

Example: Washington. Washington's Office of the Insurance Commissioner says insurers must pay interest of at least 8% starting from the date of death, and an additional 3% on claims not settled within 90 days after proof of death is provided.

These laws set duties for insurers. They do not promise when any one claim will be paid. If a claim seems stuck, call your state insurance department, which handles consumer complaints about insurers.

How many death certificates do I need for life insurance?

Plan on one certified copy for each insurer you file with, unless the insurer says a copy is fine. Many families order several copies at once, because banks, pension plans, and government agencies may also ask for one. Our death certificate guide lists who typically asks.

Example (hypothetical, not real data): A widow has two life insurance policies with two insurers and one employer group policy. She orders certified copies for each insurer and the employer, plus copies for the bank and the car title, and asks each office whether it will return the certified copy.