What Happens When the Owner of a Life Insurance Policy Dies?

Shawn Plummer

CEO, The Annuity Expert

What Happens To The Life Insurance Policy When The Owner Dies?

When the policy owner dies, the life insurance company will pay the death benefit to the named beneficiary. The death benefit will be paid to the deceased’s estate if no named beneficiary exists. The death benefit is typically paid out within 30 days of receiving proof of death.

If you are a named beneficiary on a life insurance policy, you must provide the company with a few documents to claim your payout. These documents include the following:

  • Proof of death (death certificate)
  • Policy number
  • Beneficiary claim form

You must also provide the life insurance company with any other document requests. Once the life insurance company has all the required documentation, they will process the claim and issue the death benefit payout.

Related Reading: Look up life insurance policy

Who Owns A Life Insurance Policy

Who Owns A Life Insurance Policy?

When someone purchases a life insurance policy, they are the policy owner. The insured is the person whose life is being insured, and the beneficiaries are the people who will receive the death benefit if the insured dies.

The owner of a life insurance policy has the right to change the beneficiaries at any time and cancel the policy at any time. However, it’s important to note that the death benefit will only be paid if the insured dies while the policy is in force.

As a result, it’s essential to carefully consider all of these factors before purchasing a life insurance policy.

What Happens When The Owner Of A Life Insurance Policy Dies

How Long After Someone Dies Can You Claim A Life Insurance?

A beneficiary can start the claim process immediately after the policyholder’s death, but the insurance company may not issue payment for several weeks. Once the claim is processed and approved, the insurer will send a check to the beneficiary.

Related Reading: Can you get life insurance on anyone

What Happens To The Life Insurance Policy If I’m Not A Named Beneficiary?

If you are not a named beneficiary on the life insurance policy, you must provide the life insurance company proof that you are the rightful heir to the policy. This can be done by providing a copy of the deceased’s will or estate planning documents.

Once the life insurance company has verified your status as the rightful heir, they will issue the death benefit payout to you.

What Can Be The Reason For The Rejection Of A Death Claim?

There are several reasons why an insurance company might reject a death claim.

The most common reason is that the policyholder did not disclose all relevant information about their health when they applied for the policy. Insurance companies rely on this information to determine the premium and the level of risk associated with insuring an individual. If an insurance company finds out an individual withheld information about their health, they may retroactively cancel the policy or refuse to pay the death benefit.

Other reasons for rejection include suicide, fraud, and accidental death not covered by the policy. It’s essential to read your policy carefully to understand what is and is not covered.

Life Insurance Holder Dies

Beneficiaries Pay No Taxes

It’s important to note that life insurance payouts are not subject to income tax. This means that beneficiaries will receive 100% of the death benefit amount. In addition, life insurance payouts can be used for any purpose, so beneficiaries can use the money to cover expenses related to the death, such as funeral costs or outstanding debts.

Next Steps

Although claiming a life insurance payout can seem daunting, our team is here to help make it as smooth and easy as possible. We highly recommend that you reach out to us so that we can help you navigate this process. Thank you for reading our guide on life insurance payouts.

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Frequently Asked Questions

Is an autopsy required for life insurance?

No, an autopsy is not required for life insurance. The insurance company will only request a death certificate.

How do you know if you are a life insurance policy beneficiary?

You may be the beneficiary of a life insurance policy and not even know it. However, if someone names you as the beneficiary of their life insurance policy, you will typically be notified by the insurance company when the policyholder dies.

Does life insurance automatically go to the spouse?

No, life insurance does not automatically go to your spouse. You will need to designate your spouse as the beneficiary of your policy for them to receive the death benefit.

Can someone take out a life insurance policy on me without my knowledge?

No, someone cannot take a life insurance policy on you without your knowledge. The insurance company will require you to complete a medical exam and answer questions about your health before they will issue a policy.

How do I determine if someone has a life insurance policy on me?

The National Association of Insurance Commissioners (NAIC) has a free Life Insurance Policy Locator Service that can help you find out if someone has a life insurance policy on you. You must provide the person’s name, date of birth, Social Security number, and address. The NAIC will then search its database of life insurance policies to see if there is a match.

*Disclosure: Some of the links in this guide may be affiliate links. I may receive a commission at no cost to you if you purchase a policy. It helps us keep the lights on!

Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

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

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