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How Long Does It Take for a Life Insurance Policy Claim to Payout 2014?

by Brian M on June 16, 2013 · 10 comments

How Long Does It Take for a Life Insurance Policy to Pay Out Money?

What is the Average Turnaround Time for a Life Insurance Policy to Payout the Claim Money 2014?

One of the most common questions I receive regarding life insurance is “How long does it take for the life insurance company to payout the money if I passed away?”  This is very important because you don’t want your family to be left in financial limbo waiting for proceeds from your policy.  The initial period after an unexpected loss is stressful enough, you don’t need you family to be waiting around indefinitely for the life insurance money.  The reality is that the bills still need to be paid after you’re gone.

What is the average turnaround time for insurance companies to pay out the death benefit in 2014?

In a recent survey by LIMRA (Life Insurance Management Research) the average time it took the top companies to pay out a claim was 19 days.  In fact, in the same study by LIMRA, 95% of life insurance beneficiaries were satisfied with their overall claims experience.  This is reassuring news to everyone involved in the life insurance industry from customers to agents.

Why is there such an overall positive review of life insurance claims process?

Life insurance is one of the most highly regulated industries in the country.  Every state has an insurance commissioner to oversee the laws and regulations for the citizens of that state and to protect them in every way possible.  One way that most states aim to protect consumers is by enforcing time payment laws.  These laws typically necessitate that insurance companies reply to a filed claim within a dedicated amount of time, usually 15 to 45 days, depending on the state.

What should I do after a death?

The first thing the beneficiary of a life insurance policy should do after a death of the insured is to contact the claims department of the life insurance company.  This number can be found on the policy or by calling the general toll free main number of the insurance company.  Also, most companies have the phone number online or even the process can be done on the company’s website.

The company will require the death certificate and some additional paper work to be filled out and returned.

Tip: Call the life insurance claims department immediately after a death to discuss the necessary steps in order to complete the mandatory paperwork. Also make sure everything is done satisfactory on the first attempt to prevent any delays in receiving the policy money.

Is there anything that could delay or prevent me from receiving the benefit money in a timely manner?

Most life insurance polices have a two year contestability clause, meaning the insurance company has the right to contest or to refuse to pay out the death benefit if the applicant misrepresented him or herself on the application.  This typically includes failing to intentionally disclose a current or previous medical condition or not divulging a life or health style factor that was asked on the initial application. 

If a person passes away during the first two years from the inception of the policy, the time it takes to receive the full benefit may be longer than the typical claim.  Since the insurance company is still within the two year contestable period, they might request additional medical records from the insured’s doctors to assure there wasn’t any fraud or misrepresentation.  (Note: there isn’t any time period in which the insurance company cannot contest the payout if the policy was procured by fraud as there is for misrepresentation.)

Conclusion

Generally, death claims are paid in a timely matter, usually within 30 days or less.  This is after the life insurance company has received all the necessary forms.  If the policy is less than two years old the insurance has the option to investigate the claim to find out the applicant lied at the time of application in order to be approved for the policy.  Most funeral homes will allow you to show proof of life insurance in order to be reimbursed when you receive the money to prevent any delays in burial or from you having to produce the money out of pocket while you are waiting for the life insurance check.

Since the insurance industry is so highly regulated and with the recent 95% claims satisfactory survey results by LIMRA, you can have the peace of mind knowing that your beneficiaries should not have an issue in receiving a timely payment of the policy death benefit. 

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{ 8 comments… read them below or add one }

Jason Fisher June 22, 2013 at 5:43 pm

It’s always good to hear LIMRA keeping tabs for the public on how efficient they are. Everyone circulates the bad news, but never the good. It’s great positive reinforcement for the public when surveys are done like this. In addition to how fast companies pay out, I wonder if LIMRA tracks how many companies also pay interest from the date of a death claim to the date it is paid to the beneficiaries. I know not all companies do this, but it’s a pretty extraordinary gesture.

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Tony thomas June 27, 2013 at 1:16 am

I am strongly agree with Mr Jason, LIMRA must keep strong eye on working process of company as they promise more but delivery nothing at time of unwanted situation occur. And a person or family do face lot of problems too before, if they get their money.

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Hadley July 2, 2013 at 10:23 am

When my mom passed away we contacted the life insurance company and they sent some papers for us to fill out. They told us to send them back along with an original death certificate for my mom. Once they received the completed forms and death certificate they sent us a check in the mail within a week or so.

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Prashant July 8, 2013 at 3:36 am

Why a person buying Life Insurance will think of death benefit incase of genuine claims?

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Mike james July 25, 2013 at 1:24 am

It all depends on the company’s policy as it is necessary to read whole with accuracy because insurance is necessary, but benefits are also need to be taken care. It is Good idea that their is certain head on all the insurance companies and it is require.

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Chad August 21, 2013 at 8:21 am

A friend of mine got theirs in a couple weeks after it was received.

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CarolAnn August 26, 2013 at 8:21 am

During my divorce, my ex allowed his policy to lapse from non-payment though he was supposed to continue it. The life insurance company never contacted me, they sent all mail to his address though I was the owner of the policy. When I found out, I had to get it reinstated, and he signed it because I said I’d pay the premiums. 6 months later he was diagnosed with stage 4 bladder cancer. He just passed away in July. Now the insurance company is contesting paying me because it was reinstated less than a full 2 yrs ago. They want to make sure he didn’t lie in the application. My question is, if he did not know and was not diagnosed with cancer until 6 months later, but may have had it at the time not knowing, can they deny the claim? Or is it from when he’s officially diagnosed?

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Scott Anderson August 27, 2013 at 7:14 am

Hello CarolAnn,

Sorry for you situation. This is tough because of the few different factors. My best advice would be to contact an attorney who specializes in this area. A quick google search and you can find some good ones.

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