How Long Does Life Insurance Take To Pay Out?

Shawn Plummer

CEO, The Annuity Expert

How long does it take to cash out a life insurance policy?

The average life insurance payout can take as little as two weeks, up to two months, to receive the death benefit. However, the timeline depends on several factors.

If you have an active life insurance policy, the company will pay your beneficiaries when you die. This way, your family does not need to worry about paying for things if they don’t have someone earning money.

The time it takes to file a claim and receive the death benefit is influenced by many things. One of the most important factors is when and how the insured died. All insurance companies have different rules, so be sure to ask about them before you start filling out your paperwork.

How long does it take for a beneficiary to receive money?

The time it takes to receive your death benefit depends on how quickly you request the money. Most people can expect to get their payment in about 60 days. Factors in the timing include:

  • The length of time after death to file a claim.
  • Providing documentation required for the claim.
  • The length of time the policy was active.
  • The insured’s cause of death
  • State laws regarding life insurance payouts

Some states require life insurance companies to periodically check their list of policyholders against the Social Security Administration’s death records. This is so people will not get unclaimed benefits.

If you want your life insurance claim to be processed quickly, you should file the claim yourself. Life insurance companies let you file online or by calling them directly.

Why do life insurance claims take so long to be processed or denied?

Any legitimate claim for death benefits can be filed with proper paperwork. You shouldn’t have any problems submitting a claim as long as you have documentation to prove that the policyholder has died and that you are the beneficiary. Some claims, on the other hand, might get delayed or—in extremely rare circumstances—refused because of:

How The Insured Died

When a policyholder dies while engaging in something not covered by their policy, such as bungee jumping, you won’t be paid a death benefit.

Insurance Fraud

The insurer will look into the claim. If the policyholder lied on their insurance application or there are concerning circumstances surrounding their death, they may reduce or deny the payment.

Missing Paperwork or Policy

You’ll likely need a copy of the deceased’s policy to file a claim. If you don’t know where to find it or other required documents, it will slow the claims process.

Policy Expired

If the policy owner stops paying their premiums and lets their policy lapse, you won’t receive a death benefit since their coverage is no longer valid.

Death During The Contestability Period

A death in the first two years of a policy is contestable; therefore, the insurer may investigate an insurance application for fraud. This might cause a payout to be delayed, but you’ll get the full death benefit as long as the deceased was honest.

How to file a life insurance claim

You may make a claim on behalf of the decedent by visiting the insurer’s website or calling them directly. In addition to the deceased’s name, date of birth, policy number, and cause of death, the provider will ask you for any other pertinent information (such as funeral costs).

Documentation Required

  • Death Claim Form
  • Copy of the insurance policy
  • Death certificate
  • Obituary regarding the death
  • Drivers license or government-issued ID

Finding the life insurance policy

It’s important to remember that the insurance company typically doesn’t notify beneficiaries when a life insurance policy is paid out. Even if they are aware of their newfound wealth, some policyholders neglect to inform their loved ones that they are the beneficiary of a life insurance policy or where they may find the paperwork. If you’re a beneficiary or think you might be

  • Call the known life insurance company.
  • Contact any financial advisors or estate planning attorney
  • Contacting the deceased’s employer to find out if they had a group insurance policy.
  • Contact the National Association of Insurance Commissioners for their policy locator service.

How is life insurance paid out?

Beneficiaries of life insurance payouts choose how they would like to receive the money, whether in a lump sum or installments. There are typically many alternatives for people who want to receive their compensation in installments:

Lump-Sum Payout

The most common payment method is a lump-sum distribution since it helps beneficiaries cover expenditures incurred from the policyholder’s death. These payments are tax-free.

Installment Payout

Life insurance that pays out over installments is paid out with an annuity. An annuity is a policy that allows beneficiaries to get the death benefit over fixed installments for a certain length of time if they don’t require immediate money. The idle funds are invested at a set interest rate. Any interest earned from the annuity is taxable (not the claim itself).

Retained Asset Account

The insurance company keeps the money in an interest-bearing account and allows you to withdraw funds by check. Any interest earned is taxable.

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Frequently Asked Questions

How long does it take for life insurance to pay a funeral home?

Insurance companies typically payout within 14-60 days after you submit a claim. However, the timeline may be delayed by mistakes or investigations.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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