How does Life Insurance Practically Work In Event of Death?

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curiousinvestor
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How does Life Insurance Practically Work In Event of Death?

Post by curiousinvestor »

Hi Bogleheads,

This is rather a morbid topic, but I am preparing documents and info and all for my family just in case I pass. I generally manage the financial affairs and want to make sure they aren't stressed with this all and know what to do.

I have term life policies.
1) Should I pass away, how does it work for my spouse to get the life insurance payment?
2) My guess is there's some sort of death certificate (from the hospital? or city government?) that spouse would need to submit to the life insurance company? It seems like a lot to manage in the middle of grieving.
3) Is there a timeline that this has to be done by (in other words, is there some sort of expiration date if spouse doesn't contact life insurance company in a timely manner?)
4) Any general tips?

Thanks.
AlohaJoe
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Re: How does Life Insurance Practically Work In Event of Death?

Post by AlohaJoe »

https://www.ramseysolutions.com/insuran ... nce-claims is a decent quick overview.

But in general you should ask your life insurance agent. The company you have a policy from almost certainly explains how to do it. That will give you precise details instead of the vague ones you'll get from us here who can only speak in generalities.
It seems like a lot to manage in the middle of grieving.
I'm not sure how else you'd envision it working, though? "My spouse died. I totally promise. Please send me $500,000 to this account." Usually people want proof before sending out a lot of money like that.
3) Is there a timeline that this has to be done by (in other words, is there some sort of expiration date if spouse doesn't contact life insurance company in a timely manner?)
States have their own laws, so it depends on what state you live in. But in many states I believe there's around a 2 year limit.
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curiousinvestor
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Re: How does Life Insurance Practically Work In Event of Death?

Post by curiousinvestor »

AlohaJoe wrote: Tue Jul 05, 2022 2:01 am https://www.ramseysolutions.com/insuran ... nce-claims is a decent quick overview.

But in general you should ask your life insurance agent. The company you have a policy from almost certainly explains how to do it. That will give you precise details instead of the vague ones you'll get from us here who can only speak in generalities.
It seems like a lot to manage in the middle of grieving.
I'm not sure how else you'd envision it working, though? "My spouse died. I totally promise. Please send me $500,000 to this account." Usually people want proof before sending out a lot of money like that.
3) Is there a timeline that this has to be done by (in other words, is there some sort of expiration date if spouse doesn't contact life insurance company in a timely manner?)
States have their own laws, so it depends on what state you live in. But in many states I believe there's around a 2 year limit.
Thanks AlohaJoe. Yes definitely there needs to be a process and it'll be a lot to manage in the middle of grief. I guess I was just talking out loud and trying to make it as easy as possible. Thanks for the info I'll check it out and good idea to contact the actual insurance company (which seems obvious!)
HIinvestor
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Re: How does Life Insurance Practically Work In Event of Death?

Post by HIinvestor »

When our loved one died, the executor gave death certificates to her surviving brothers. They sent in a certified copy of the death certificate to insurers and I believe completed a simple form. Checks were written and mailed out to both beneficiaries soon thereafter. It was pretty straightforward. The executor was available to assist as needed.
Sprucebark
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Re: How does Life Insurance Practically Work In Event of Death?

Post by Sprucebark »

I’ve been through three of them on an employee policy. One was a botched robbery (wrong place wrong time), one was a homicide, and the third one was undetermined but I believe it was murder as well. It’s pretty morbid stuff!!

You’ll need names, policy number, SSN, make sure your policy is paid up to date, a copy of the death certificate, your direct deposit info (routing and account number) and that’s about it. There will be some tax paperwork too- FACTA and backup withholding (this would impact a non resident alien beneficiary).

For the death certificate for the murders above, the insurance has accepted a pdf scan to email. They have never asked for a certified copy.

If you have accidental death on your policy, then the death certificate will need to state the appropriate cause of death for that to be paid out. On the undetermined death above, the family never got paid the AD&D (accidental death) portion of their life insurance. It all goes back to the death certificate as issued by the medical examiner.

One other thing- insurance companies generally don’t save the beneficiary forms. You need to make sure your beneficiaries have a copy and are aware of the policy. Upon death, the insurance will ask for the beneficiary form.

One of the beneficiary designations from the above was written on a napkin 40 years prior. It was accepted by the insurance company. They weren’t happy but there was nothing else, and technically you can use any form to designate your beneficiary. Just be sure to update them for life changes. In that case it went to an adult kid and the deceased’s recent young kids got nothing. One of the others from the above put down 50% to the boyfriend as primary and 50% to the adult child as contingent (no relation between the child and the boyfriend). I believe the intent was that each would get half. Guess what? The boyfriend got 100% and the adult child got nothing. I didn’t realize that, but apparently contingent will only be paid out if the primary is all dead. Even if you say 1% to primary and 99% to contingent, the primary will get 100% and the contingent will get 0%. That changes of course if the primary is dead
Chardo
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Re: How does Life Insurance Practically Work In Event of Death?

Post by Chardo »

It's a pretty simple process. The beneficiary or executor calls the insurance company and notifies them. The insurer will confirm the policy is in force and who is current beneficiary. They will send a claim form, or you can get one on their website. Fill out the form and send in with a certified death certificate. Usually the hospital or funeral home arranges for those from the town or county. They will send a check or direct deposit, or some will use an interest bearing account and send you a checkbook. If the policy is more than 2 years old, the claim is paid promptly after submission, typically a few days. If the policy is less than 2 years old, there will be an investigation. They will try to determine if there was any misrepresentation on the application, such as undisclosed health problems, smoking, etc. They can deny the claim if there is information that would have affected issuing the policy. The investigation can take weeks or months. If the applicant was honest, the claim will be paid.

There is no time limit for filing a claim. If the policy was in force on the date of death, they will pay the claim at any time. However, if you wait too long, the money might go to the state unclaimed funds and you'll have to deal with them instead.
Chardo
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Re: How does Life Insurance Practically Work In Event of Death?

Post by Chardo »

Don't worry, that 40 year old napkin doesn't happen these days. Carriers do scan and keep copies of beneficiary forms. You don't need to produce the form.
dknightd
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Re: How does Life Insurance Practically Work In Event of Death?

Post by dknightd »

curiousinvestor wrote: Tue Jul 05, 2022 1:38 am 2) My guess is there's some sort of death certificate (from the hospital? or city government?) that spouse would need to submit to the life insurance company? It seems like a lot to manage in the middle of grieving.
We no longer have live insurance, but when we did I kept a folder with all policy information.

No doubt you would have to provide a death certificate. I'm not sure how long the process would take.

The reason I'm posting is a similar process is probably required as a beneficiary of a retirement account. I keep a 6 month "emergency fund" for this purpose. This should give grieving spouse enough time to prove I'm dead and gain access to the money. It is in a joint bank account they have east access to.
Retired 2019. So far, so good. I want to wake up every morning. But I want to die in my sleep. Just another conundrum. I think the solution might be afternoon naps ;)
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celia
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Re: How does Life Insurance Practically Work In Event of Death?

Post by celia »

The beneficiaries would have to file a claim just as you would do for any insurance. For life insurance, of course they want to see the death certificate because there are a few reasons the claim would be denied. For example, if the deceased committed suicide within the first two years or cause of death was an illness you hid from them when applying, they probably wouldn’t pay.
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Tubes
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Re: How does Life Insurance Practically Work In Event of Death?

Post by Tubes »

One more thing to add: you can also work with the funeral home and assign part of the life insurance proceeds to the funeral home to pay for it. This works if the insurance allows such assignment.

Go cautiously here, since the funeral director may want to upsell in light of the payout.

Still, it can help provide a way to pay without worrying about coughing up funds from elsewhere. Additionally, you are already having a very uncomfortable discussion with the funeral director so it doesn't hurt much to add another topic to the discussion.
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Stinky
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Re: How does Life Insurance Practically Work In Event of Death?

Post by Stinky »

Chardo wrote: Tue Jul 05, 2022 4:12 am It's a pretty simple process. The beneficiary or executor calls the insurance company and notifies them. The insurer will confirm the policy is in force and who is current beneficiary. They will send a claim form, or you can get one on their website. Fill out the form and send in with a certified death certificate. Usually the hospital or funeral home arranges for those from the town or county. They will send a check or direct deposit, or some will use an interest bearing account and send you a checkbook. If the policy is more than 2 years old, the claim is paid promptly after submission, typically a few days. If the policy is less than 2 years old, there will be an investigation. They will try to determine if there was any misrepresentation on the application, such as undisclosed health problems, smoking, etc. They can deny the claim if there is information that would have affected issuing the policy. The investigation can take weeks or months. If the applicant was honest, the claim will be paid.

There is no time limit for filing a claim. If the policy was in force on the date of death, they will pay the claim at any time. However, if you wait too long, the money might go to the state unclaimed funds and you'll have to deal with them instead.
This is a nice summary.

If you’ll just include the one bolded sentence above in your “in case of my death” document, that will start them off on the right path. The life insurance company will walk them through the process.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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cockersx3
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Re: How does Life Insurance Practically Work In Event of Death?

Post by cockersx3 »

In 2020 we helped a relative deal with the logistics of a spouse who died of a long illness. The funeral home reported the decedent's death to Social Security, which inactivated the decedent's social security number. We found that many organizations would just check the social security number status and, if it was inactive, use that as proof of death. There were only a few places where an actual death certificate was required, and only rarely was a certified copy of it needed.

One more word of advice, if you are not already aware. Any bank or credit card accounts with the decedent's name as primary owner will generally be automatically closed within a few days of death, via the social security number reporting mechanism I described. Since the surviving spouse was only listed as an authorized user on the decedent's accounts (not a joint owner) the surviving spouse was left without any credit card access and had to apply for their own cards. Not terrible, but had to watch the cash flow more carefully during those initial few weeks which was an additional stress during a difficult time. Highly recommend having spouse get a credit card in their own name to avoid this issue in the future.
Lastrun
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Re: How does Life Insurance Practically Work In Event of Death?

Post by Lastrun »

Also note the insurance company may offer the beneficiary some type of retention account or payout options. If I was writing my death book, I would tell my beneficiary to just check lump sum on any payout option.

https://www.insurance.wa.gov/life-insu ... t-accounts
cubs1999
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Re: How does Life Insurance Practically Work In Event of Death?

Post by cubs1999 »

Lastrun wrote: Tue Jul 05, 2022 5:55 am Also note the insurance company may offer the beneficiary some type of retention account or payout options. If I was writing my death book, I would tell my beneficiary to just check lump sum on any payout option.

https://www.insurance.wa.gov/life-insu ... t-accounts
I was gonna mention this but see that someone already did. There's a bunch of possibly confusing options including one that isn't even allowed in mine and several other states. Lump sum is best for this claim. One of the options is where they keep the money in an account for you and of course they are vague on what interest rate is paid and it mentions not being FDIC insured.

The claim process was quick for one policy I had. Most important thing is make sure your beneficiary forms are up to date. The one claim that's taking forever for me had a trust name with an trust name that got change in a trust reinstatement and also had the wrong date for the trust being established. I have no idea how they have this wrong date as I see a copy of the beneficiary form. It has the old trust name with the wrong establishment date(but that date isn't what they have). Anyways they said they will pay out after they type up an indemnification form which they said will take up to 6 weeks. (Back to beneficiary info, parent hadn't checked this policy as notes of what to do in the event of death from a year ago stated me as beneficiary, so parent thought I was sole beneficiary of this policy. Fortunately, this doesn't affect me that badly but it's just holding up the money. There are plenty of stories of people getting no benefits bc insurer forgot to update beneficiary forms after divorce or remarriage or whatever in the inheritance gone wrong thread).

As someone who has just gone through a parent's death, the things that made the process easier was first that there was a binder with all the policies and accounts. Also had will, trust, POA, and healthcare POA. That parent had told me and had written down desires for end of life care helped a lot when. I had to make medical decisions at the end. All the policy and investment info being in one place has helped. It'll be overwhelming when the death happens, but another thing that has helped me is a friend who went through several family deaths told me early on that it will feel like there's so much to do. He suggested that I have to remember that there's no rush for a lot of stuff. Told me just to try to get a little down everyday and not to feel overwhelmed and think that everything has to be done today.

As for death certificates, funeral director handled that for me. I got too many as many laces accepted scans or just copied the certified copy. I still was glad I erred on too many than too few. I didn't have to worry about running out, and it's most cost effective in my county to get more at once than to have to get more later (plus it would be a pain to have to drive to the courthouse and get more copies).

In summary, life insurance for sole beneficiary was quick on one policy but can be messed up if beneficiary paperwork is messed up (and as mentioned, in the event of a death within two years o getting the policy as there will be a more thorough investigation). I wanted to mention that claiming the TOD on several stocks was annoying because of the medallion signature requirement. I pushed off doing that for several weeks because I knew I had to get that stamp. Also one bank account where I'm beneficiary is taking forever: Been almost two months. I've called twice and they tell me they have all the info but their are delayed in that department. Fortunately I don't need the money from that account and it's earning interest as it sits there but it's annoying and it would suck for someone that needed those funds. (I could have just transferred it out myself as I had log in info but wanted to do things properly. I think it's unacceptable for them to be that delayed. I can only imagine if someone had a lot of money stuck and needed it to pay mortgage or whatever after a death).
clip651
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Re: How does Life Insurance Practically Work In Event of Death?

Post by clip651 »

When my parent passed, in addition to the death certificate, the insurance company wanted a release from the funeral home saying the funeral bills had been paid. Not sure if that's particular to my state, or what. The bills had been paid, but there was a short delay in getting that confirmed to the satisfaction of the insurance company so the funds could be released to the beneficiaries. (The funeral home was not listed as a beneficiary, FWIW.)
gavinsiu
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Re: How does Life Insurance Practically Work In Event of Death?

Post by gavinsiu »

I have had people in my life pass away.
1. If your spouse is named as beneificiary of the policy, they should get it after a proof of death. The spouse would inform the life insurance, fill out a form and then send in the death certificate. Depending on the size of the account, it may take a few weeks or a month or two.
2. Yes, a death certificate is needed, however, these do not need to be submitted right away.
3. I do not know, but there is probably some sort of status of limitation that vary by state to state. I would imagine that it would be at least a year.

Here's the process in a nutshell. It would be helpful if your spouse have help from the family and friends. The process goes

1. Locate will and trust doc. Set up funeral service for the deceased and acquire death certificate. Setup obituary.
2. Follow Will. File probate. Contact Life insurance, and accounts to informed them of the deceased so that the account are either transferred or cancelled.

Make sure that your spouse and your kids know of the Will and estate plan. They don't necessary have to know about the content, just where to find it. One of the more stressful situation is not being able to find the will. You should name an executor ahead of time and get their ok in it. This will most likely your spouse unless you feel that they can't do it.

The first priority will be to setup funeral service for the decease. Ideally, you the deceased will have provided instructions on what you want to do. You may have provided a burial plot ahead of time, or that you want to be cremated, etc. If you do not do this, your family will end up doing that.

Someone will need to contact all of the family and friends announcing the deceased's passing.

In addition to the funeral, you will need to file for probate and may need to write an obituary announcing the decease's death.

You will need to get death certificates from the funeral director. Depending on state, this is usually handled by the immediate family. If the cause of death is unknown, this could hold up the certificate. This is however beyond your control. Get a few for the accounts, but you can always get more later.

Once the funeral has been handled, the family can contact accounts and informed them of the deceased passing. The process is generally to contact the accounts, who will send them some sort of form or a link to a form to fill out. You will send them a death certificate or a copy of one. In general, you want to handle the financial accounts first. You will probably need to cancel services or transfer services to the new name. Note the life insurance did not ask if the funeral bill is paid unlike the other poster, so perhaps this vary from state to state or by policy.

One thing you may want to hold off are things like accounts with digital assets. In most cases, digital assets do not survive after death. For online pictures, you might want to transfer them to a new account or change name on the account if possible.

The retirement account could take a while, especially if your family need to transfer the account.

At some point depending on probate process, the estate will be handled and the executor will have to file the final return.

If this seems a lot of work, it is and they have to do it in the time of grieve. It would be helpful for your spouse to delegate the task to a number of family and friends.

To make things easier for your spouse. You may want to prep ahead of time.

* Make sure you have a Will or instructions in case you died.
* Make sure you have a folder with your accounts with contact info if needed. Keep it up to date. This could be a password manager that you grant access to after death or in life (in case of spouse).
* Make sure you setup beneficiaries for life insurance, banks, retirement account ahead of time and check it twice. If you make any changes, make sure they are properly updated afterwards. In my case, the deceased had change the policy to give money to charity but somehow there were conflciting paperwork at the insurance. The insurance payment was held up while the insurance had to get all of the beneficiaries to agree that this was what the deceased wanted. This could have been bad if the beneficiaries did not agree.
* if you have a pension, make sure it's setup with your spouse as the beneficiary ahead of time assuming this is what you want.
mr_brightside
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Re: How does Life Insurance Practically Work In Event of Death?

Post by mr_brightside »

great words of wisdom above.

the single most important thing i have read in many places is : make sure the beneficiary forms are up-to-date /correct with each of your insurers.

that single action would trigger 'immediate' disbursement barring some of the irregularities above.

also as stated above -- make sure you understand the difference between primary / secondary / contingent beneficiaries and the various payment implications.

i don't worry too much about how my possessions are distributed when i die. but i do care a lot about how the $$$ gets divided and i hope i have it simplified for my heirs.

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secondcor521
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Re: How does Life Insurance Practically Work In Event of Death?

Post by secondcor521 »

As a general tip, make sure your beneficiaries are aware of the policies. We maintain a list of insurers and policy numbers with approximate face value, which we figure should be enough for the insurer to process the disbursement when the time comes. Of course make sure the beneficiaries know where this documentation is located (we have "Death" folders and documents).

Simplistically, one of the beneficiaries provides a copy of the death certificate to the insurer, perhaps along with a form. The insurer then will try to get you to let them keep the money. We prefer lump sum distribution, which should be one of the options. Then they mail a check.

If estate taxes are a concern, it is possible to set up an ILIT which owns the policies. This gets the policy proceeds out of the estate of the decedent.

In my area, death certificates are generated by the state. The hospital or funeral home can help the family with obtaining copies. You might need several for various purposes in addition to life insurance. It's not difficult.
deikel
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Re: How does Life Insurance Practically Work In Event of Death?

Post by deikel »

cubs1999 wrote: Tue Jul 05, 2022 6:36 am As someone who has just gone through a parent's death, the things that made the process easier was first that there was a binder with all the policies and accounts. Also had will, trust, POA, and healthcare POA. That parent had told me and had written down desires for end of life care helped a lot when. I had to make medical decisions at the end. All the policy and investment info being in one place has helped.
Very much this

It really helps if everything is organized and neat and not loose in a shoebox.

I had good experience with insurance folks so far, I called and they were very nice and guided me through what was needed. Pretty straightforward.

I will also say that the people grieving are sometimes very capable of doing stuff and clear of mind and sometimes not so much, some people are at one death and not another...if at all possible have more then one person knowing where the documents are.

I think my most annoying memory is the funeral director asking me all kinds of questions as to the flowers to be ordered, the music to be played and how many candles to be set up....and it was all upselling extra items ! That was a low point at a time that was pretty shitty anyway....insurance was easy-peasy in comparison
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gavinsiu
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Re: How does Life Insurance Practically Work In Event of Death?

Post by gavinsiu »

One exercise you may want to try is to imagine that you handling your own death. How would you want things handled. Write some some guiding instructions for your love ones to follow.

In a lot of family there is often a division of labor. One spouse may end up managing the finance. While you are still alive, make sure that the spouse knows enough about the accounts and what your financial plans are.
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Re: How does Life Insurance Practically Work In Event of Death?

Post by LittleMaggieMae »

curiousinvestor wrote: Tue Jul 05, 2022 1:38 am
2) My guess is there's some sort of death certificate (from the hospital? or city government?) that spouse would need to submit to the life insurance company? It seems like a lot to manage in the middle of grieving.

4) Any general tips?
I'm sure some one gave options for where the death certificate will come from (and that you should get (pay) for more than just one or two - as you may need more than that and getting additional certified death certificates can be more expensive than that first time request for them.

Additional tips:
There IS a lot to manage in the middle of grieving. You might want to give some thought to where you will be buried (or what will be done with your ashes). I have a lot of Dead Relatives in a bunch of different cemeteries. Headstones can be surprisingly expensive if you want something more than a plain-ish stone in the ground.
Funerals and Wakes can be expensive as well. The prices of what you get interred in can also be pricey. The whole final send off (for my relatives) is usually lavish so for us it's important to plan for it. :)

That said, if you have opinions or want to be interred in a specific place (like with the rest of your close Dead Relatives) you may want to look into paying and reserving a spot. you may want to work with your spouse so you are both on the same page. There are ALOT of decisions to be made by people who are grieving - making your wishes known before hand (or getting the plot or agreement for your final resting place a head of time) removes some of the decisions (and drama) at an already stressful time.

You might not really need to think about this now (people move away, life happens) - but keep it in the back of your mind. The surviving spouse is gonna have a lot of decisions to make while grieving.
PoppyA
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Re: How does Life Insurance Practically Work In Event of Death?

Post by PoppyA »

Agreed. I got 5 certified copies of a death certificate . The estate is settled & I still have 3. There were IRA’s, life insurance & other accounts involved. It seems many places have other means to prove the death has occurred.

As stated above, ask your policy holder what your wife will need.
Chardo
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Re: How does Life Insurance Practically Work In Event of Death?

Post by Chardo »

PoppyA wrote: Tue Jul 05, 2022 4:27 pm Agreed. I got 5 certified copies of a death certificate . The estate is settled & I still have 3. There were IRA’s, life insurance & other accounts involved. It seems many places have other means to prove the death has occurred.

As stated above, ask your policy holder what your wife will need.
Some places accept a photocopy of the death certificate, not the actual with raised seal. Especially for smaller amounts. Other places will return the official certificate to you after they verify and scan it, so you can use it again.
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curiousinvestor
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Re: How does Life Insurance Practically Work In Event of Death?

Post by curiousinvestor »

To Everyone - A big thanks to each of you for sharing your wisdom. THANKS! Very helpful. I have some next steps.
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celia
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Re: How does Life Insurance Practically Work In Event of Death?

Post by celia »

cockersx3 wrote: Tue Jul 05, 2022 5:53 am In 2020 we helped a relative deal with the logistics of a spouse who died of a long illness. The funeral home reported the decedent's death to Social Security, which inactivated the decedent's social security number. We found that many organizations would just check the social security number status and, if it was inactive, use that as proof of death.
This reminds me that sometimes the family is not aware that there is a life insurance policy, so will not file a claim. Since the insurance company routinely scans the SS Death Index looking for their policyholders, if a claim is not filed, they are now required to send a letter to the last known address of the beneficiary informing them that the deceased had a policy with them. They will likely send the claim form with the letter. Of course, this looks suspicious on the family's end and we have had a few posters here ask about it. We reassured them that this is legal and should go ahead and file the claim.

For those of us who have created a "death book" or list of assets, it is just as important to list that you have no life insurance as to say who you have coverage with. Why make the family spend time looking for a non-existent policy?
There were only a few places where an actual death certificate was required, and only rarely was a certified copy of it needed.
I settled an estate where I had to contact 8 to 10 places with a death certificate. But I ordered about 3 certificates and asked the companies to return them to me, which they did. Where I live, the death certificates costs $24 each, even when you order multiple copies at the same time! That must be because the cost of living dying in California is higher than most places. :?
HIinvestor
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Re: How does Life Insurance Practically Work In Event of Death?

Post by HIinvestor »

We got a lot of certified death certificates when loved one died about a decade ago in CA (about 20-30). Almost all of them were needed and kept for her accounts and her estate took about 2 years of hard work for her executor to settle. I believe we still have maybe 2 certified death certificates remaining. I am saying the # of certified death certificates needed can vary a lot.

As I recall all her assets had beneficiaries named and neither executor nor beneficiaries had to produce any forms or napkins showing their interest.
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Tubes
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Re: How does Life Insurance Practically Work In Event of Death?

Post by Tubes »

My dad passed 8 years ago and we used 9 of the 10 death certificates we got from the funeral director. I actually went to the courthouse to get another few, which it turns out we didn't need. For a while, it seemed like everyone and anyone needed the official cert.

I'm suspecting in those 8 years time, databases have gotten better, or places trust the info (from Social Security mainly) better and don't require the raised-stamp certificate as much.
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asset_chaos
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Re: How does Life Insurance Practically Work In Event of Death?

Post by asset_chaos »

I agree with HInvestor. Get minimum of 10 certified copies of death certificate. Every financial institution wanted a copy.

The one time I had to collect life insurance, it was very easy. Call insurance company, give policy number (pre-supposes all documntation is known and easily accessible). They gave me an email, to which I sent the beneficiary's bank account information and attached scan of death certificate. I'm still on the phone w/ insurance person who gets the email and confirms, yes, this is all we need. Money was in bank account two or three days later.
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oldfatguy
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Re: How does Life Insurance Practically Work In Event of Death?

Post by oldfatguy »

Lastrun wrote: Tue Jul 05, 2022 5:55 am Also note the insurance company may offer the beneficiary some type of retention account or payout options. If I was writing my death book, I would tell my beneficiary to just check lump sum on any payout option.

https://www.insurance.wa.gov/life-insu ... t-accounts
This happened with my MIL when her husband died. The insurance rep insisted on "stopping by in person" to deliver her check, and then aggressively tried to sell her on new insurance policies and investment products, instead.
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SmileyFace
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Re: How does Life Insurance Practically Work In Event of Death?

Post by SmileyFace »

I helped my Dad with a lot of items last year when my Mom passed away. She had a couple of small policies. One of the companies asked that we mail back the original policy (along with death cert) from ~50 years ago which I found strange. If I wasn't able to find it amoung her things I would have had to get some additional forms filled out and notarized. As others have said - we had enough to deal with without this hassle. These whole life policies with tiny payouts were bad deals to begin with and then they have us searching for original documents.
My parents have little money so no executor, etc.
Regarding death certificates - we go 8 of them (only $15 each) but them found most places accepted a copy. One of the brick/mortar banks we went to in person - they wanted to see an original but gave it back to us upon making a copy.
lstone19
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Re: How does Life Insurance Practically Work In Event of Death?

Post by lstone19 »

Sprucebark wrote: Tue Jul 05, 2022 3:43 am One of the others from the above put down 50% to the boyfriend as primary and 50% to the adult child as contingent (no relation between the child and the boyfriend). I believe the intent was that each would get half. Guess what? The boyfriend got 100% and the adult child got nothing. I didn’t realize that, but apparently contingent will only be paid out if the primary is all dead. Even if you say 1% to primary and 99% to contingent, the primary will get 100% and the contingent will get 0%. That changes of course if the primary is dead
Contingent beneficiaries only receive something if ALL primary beneficiaries are dead. The sum of all primary beneficiaries must be 100%. The sum of all contingent beneficiaries must be 100%. Saying something like "1% to primary and 99% to contingent" makes no sense since having a contingent beneficiary is of no effect unless all the primaries are dead. If the desire was 50% to the boyfriend ad 50% to the adult child, then they both should have been primary.

Perhaps the reason a beneficiary designation gets accepted with something like "50% to the boyfriend as primary and 50% to the adult child as contingent" is because percentages can change if one of the beneficiaries dies. For instance, my wife was one of eight children. They were primary beneficiaries of a policy of her mother's at 12.5% each. But one of the sister's pre-deceased her mother so they automatically all became 1/7 beneficiaries even though the form said 12.5% (1/8).

To further complicate things, there can be a "per stirpes" designation. In the above example of my wife and her seven siblings, if they had been designated "per stirpes", then the death of one of the beneficiaries causes that beneficiary's share to go to that person's children. The sister who died had no children so that didn't come into effect but if, for instance, one of the other sister's who had three children had pre-deceased her mother, than the division would have been 1/7 to each of the six living children and 1/21 to each of those grandchildren (3 * 1/21 of course being 1/7). A "per stirpes" designation is separate from a contingent beneficiary.
Big Dog
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Re: How does Life Insurance Practically Work In Event of Death?

Post by Big Dog »

Nearly everything financial is gonna require an original certified death certificate (so order extras); official death certificates are generated by the County govt in CA. And then they cut the check to whoever is listed as the beneficiary.
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Re: How does Life Insurance Practically Work In Event of Death?

Post by Big Dog »

oldfatguy wrote: Wed Jul 06, 2022 6:59 am
Lastrun wrote: Tue Jul 05, 2022 5:55 am Also note the insurance company may offer the beneficiary some type of retention account or payout options. If I was writing my death book, I would tell my beneficiary to just check lump sum on any payout option.

https://www.insurance.wa.gov/life-insu ... t-accounts
This happened with my MIL when her husband died. The insurance rep insisted on "stopping by in person" to deliver her check, and then aggressively tried to sell her on new insurance policies and investment products, instead.
A good reason to buy term online.
Big Dog
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Re: How does Life Insurance Practically Work In Event of Death?

Post by Big Dog »

Chardo wrote: Tue Jul 05, 2022 4:12 am It's a pretty simple process. The beneficiary or executor calls the insurance company and notifies them. The insurer will confirm the policy is in force and who is current beneficiary. They will send a claim form, or you can get one on their website. Fill out the form and send in with a certified death certificate. Usually the hospital or funeral home arranges for those from the town or county. They will send a check or direct deposit, or some will use an interest bearing account and send you a checkbook. If the policy is more than 2 years old, the claim is paid promptly after submission, typically a few days. If the policy is less than 2 years old, there will be an investigation. They will try to determine if there was any misrepresentation on the application, such as undisclosed health problems, smoking, etc. They can deny the claim if there is information that would have affected issuing the policy. The investigation can take weeks or months. If the applicant was honest, the claim will be paid.

There is no time limit for filing a claim. If the policy was in force on the date of death, they will pay the claim at any time. However, if you wait too long, the money might go to the state unclaimed funds and you'll have to deal with them instead.
Not necessarily. When my dad passed away two years ago, the insurers refused to confirm/deny who the beneficiaries were to me, the Executor. They only asked me for contact information on my siblings (who I knew were also beneficiaries), but they refused to say tell me how much the % each received..
GAAP
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Re: How does Life Insurance Practically Work In Event of Death?

Post by GAAP »

When my mom died, the funeral home requested the death certificates which were provided by the local County. Your heirs/executor will need a bunch of these -- at a minimum, one per financial account or insurance provider, plus some extras. They need to be actual death certificates or certified copies -- photocopies won't be accepted.

Where I live, life insurance is considered part of the estate for State Estate Taxes -- the executor needs to know about the amount to file the tax form. The same requirement also applies to any account with a TOD arrangement like an IRA account. Hopefully, you're lucky enough not to be affected by this. Some states also have inheritance taxes that may or may not include life insurance.

Make sure that every account, life insurance policy, major asset, etc. is titled correctly, has the correct beneficiaries if applicable, and has current contact information for those beneficiaries. That last requirement may be the hardest to ensure for non-spouse beneficiaries. Make sure that your executor/spouse has a complete list of these things.

Check for other sources of insurance that may apply in certain circumstances. Credit cards frequently have AD&D "benefits" -- but they may also have a very short application window (one of mine is 30 days). Make sure the executor/spouse is aware of this.

There are a lot of discussions about death books and similar items -- well worth reading.
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FreddieFIRE
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Re: How does Life Insurance Practically Work In Event of Death?

Post by FreddieFIRE »

clip651 wrote: Tue Jul 05, 2022 6:56 am When my parent passed, in addition to the death certificate, the insurance company wanted a release from the funeral home saying the funeral bills had been paid. Not sure if that's particular to my state, or what. The bills had been paid, but there was a short delay in getting that confirmed to the satisfaction of the insurance company so the funds could be released to the beneficiaries. (The funeral home was not listed as a beneficiary, FWIW.)
I don't understand how they could do this. Why would the life insurance company have any interest in making sure that bills are paid? Was this one of those final expenses policies sold on infomercials?
A house and a job. Once the American dream. Two things I'll never again have. Life is simple (and good).
fposte
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Re: How does Life Insurance Practically Work In Event of Death?

Post by fposte »

cubs1999 wrote: Tue Jul 05, 2022 6:36 am
Lastrun wrote: Tue Jul 05, 2022 5:55 am Also note the insurance company may offer the beneficiary some type of retention account or payout options. If I was writing my death book, I would tell my beneficiary to just check lump sum on any payout option.

https://www.insurance.wa.gov/life-insu ... t-accounts
I was gonna mention this but see that someone already did. There's a bunch of possibly confusing options including one that isn't even allowed in mine and several other states. Lump sum is best for this claim.
There's an exception to every rule. I've been getting a guaranteed 3% annual from my late father's Metlife policy and keep it as part of my portfolio for that reason. (Though I suspect rates like that may no longer be on offer.)
cubs1999
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Re: How does Life Insurance Practically Work In Event of Death?

Post by cubs1999 »

SmileyFace wrote: Wed Jul 06, 2022 7:09 am I helped my Dad with a lot of items last year when my Mom passed away. She had a couple of small policies. One of the companies asked that we mail back the original policy (along with death cert) from ~50 years ago which I found strange. If I wasn't able to find it amoung her things I would have had to get some additional forms filled out and notarized. As others have said - we had enough to deal with without this hassle. These whole life policies with tiny payouts were bad deals to begin with and then they have us searching for original documents.
My parents have little money so no executor, etc.
Regarding death certificates - we go 8 of them (only $15 each) but them found most places accepted a copy. One of the brick/mortar banks we went to in person - they wanted to see an original but gave it back to us upon making a copy.
The life insurance and annuities I claimed requested original policies but said "if available.". I had some of them but I wasn't gonna waste the extra postage to send many pages of the policy when not necessary. For the policies I had, the originals apparently we're not necessary, just requested, so they've processed the claims without them.
cubs1999
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Re: How does Life Insurance Practically Work In Event of Death?

Post by cubs1999 »

Big Dog wrote: Wed Jul 06, 2022 11:55 am
Chardo wrote: Tue Jul 05, 2022 4:12 am It's a pretty simple process. The beneficiary or executor calls the insurance company and notifies them. The insurer will confirm the policy is in force and who is current beneficiary. They will send a claim form, or you can get one on their website. Fill out the form and send in with a certified death certificate. Usually the hospital or funeral home arranges for those from the town or county. They will send a check or direct deposit, or some will use an interest bearing account and send you a checkbook. If the policy is more than 2 years old, the claim is paid promptly after submission, typically a few days. If the policy is less than 2 years old, there will be an investigation. They will try to determine if there was any misrepresentation on the application, such as undisclosed health problems, smoking, etc. They can deny the claim if there is information that would have affected issuing the policy. The investigation can take weeks or months. If the applicant was honest, the claim will be paid.

There is no time limit for filing a claim. If the policy was in force on the date of death, they will pay the claim at any time. However, if you wait too long, the money might go to the state unclaimed funds and you'll have to deal with them instead.
Not necessarily. When my dad passed away two years ago, the insurers refused to confirm/deny who the beneficiaries were to me, the Executor. They only asked me for contact information on my siblings (who I knew were also beneficiaries), but they refused to say tell me how much the % each received..
Thinking back, when I originally requested the claim forms, the two policies would not disclose to me who the beneficiary was for the policies and I was the direct beneficiary.for one of them. The companies just said that they would mail the information to the beneficiary on file.
gavinsiu
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Re: How does Life Insurance Practically Work In Event of Death?

Post by gavinsiu »

cubs1999 wrote: Wed Jul 06, 2022 2:13 pm Thinking back, when I originally requested the claim forms, the two policies would not disclose to me who the beneficiary was for the policies and I was the direct beneficiary.for one of them. The companies just said that they would mail the information to the beneficiary on file.
In my experience, I don't think they can disclose the other beneficaries' identities.
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