After someone dies, their life insurance proceeds are one of the first financial resources available to their family — arriving much faster than any inheritance that must go through probate. But you have to file a claim to trigger the payment. Here's exactly how to do it.
Step 1: Locate the Policy
Before you can file a claim, you need to know who the insurer is, what the policy number is, and who the named beneficiaries are. Sources to check:
- The deceased's paper files and safe deposit box
- Their email (search "life insurance," "policy," "premium," or insurer names)
- Bank statements for recurring premium payments
- Their employer and any former employers (group life insurance is commonly provided through work)
- Financial advisors they worked with
- The NAIC Life Insurance Policy Locator at naic.org — a free service that queries member insurers on your behalf
Step 2: Contact the Insurance Company
Call the insurer's claims department. They will:
- Confirm that the policy is in force
- Confirm the named beneficiaries
- Explain their specific claims process and requirements
- Send you the claim forms
If the policy was through an employer, contact the HR department of the employer rather than the insurer directly — they typically handle group life insurance claims.
Step 3: Gather the Required Documents
Every insurer has slightly different requirements, but the standard documents needed are:
- Certified copy of the death certificate: Most insurers require at least one certified copy. Order several when the death certificate is first issued — you'll need them for multiple purposes. Certified copies are available from the funeral home, the county vital records office, or the state department of health.
- Completed claim form: Provided by the insurer. Usually includes information about the deceased and about you as the beneficiary.
- Original policy document: If available. Most insurers can process claims without the original policy if you provide the policy number.
- Proof of your identity: Government-issued ID showing you are the named beneficiary.
Step 4: Submit the Claim
Submit the completed claim form and all supporting documents to the insurer's claims department. Methods vary by insurer — mail, fax, or online portal. Get a confirmation of receipt. Keep copies of everything you submit.
Step 5: Receive the Payout
Most straightforward claims are processed within 30–60 days. You'll typically be offered a choice of payout options:
- Lump sum: The full death benefit paid at once. Most common choice. The proceeds are generally income tax-free to the beneficiary.
- Installments: Structured payments over time. The principal is tax-free; interest accrued may be taxable.
- Retained asset account: The insurer holds the money in a retained account and provides a checkbook. Convenient short-term, but the money isn't FDIC-insured and earns lower interest than alternatives. Most advisors suggest taking the lump sum and placing it in your own account.
When Claims Are Delayed or Denied
Within the contestability period
The first two years of a life insurance policy are typically the "contestability period" — during this time, the insurer can investigate the application and deny a claim if they find material misrepresentation (lying about health status, for example). Claims for deaths occurring within this period receive more scrutiny and may take longer. After the two-year period, insurers cannot deny a claim for misrepresentation (though they can still deny for other reasons, such as policy exclusions).
Cause of death exclusions
Some policies exclude certain causes of death: suicide (often within the first two years), certain high-risk activities (skydiving, aviation), or death resulting from illegal activity. Review the policy terms if the claim is denied and the cause of death is a factor.
If your claim is denied
Request the denial in writing with specific reasons. Consult an insurance attorney if you believe the denial is improper. File a complaint with your state's Department of Insurance — they regulate insurers and can intervene. Many denied claims can be successfully appealed.
Tax Treatment of Life Insurance Proceeds
Life insurance death benefits are generally income tax-free to the beneficiary — you typically don't owe income tax on the lump sum payment. However: if you receive the proceeds in installments, any interest portion may be taxable. If the estate is the beneficiary (rather than a named person), the proceeds may be included in the taxable estate for estate tax purposes. For large estates, consult a tax advisor.