|
What
is a Life Insurance Settlement?
The life insurance settlement is how the beneficiary receives payment of
the death benefit. The company may pay the insurance settlement lump sum
or set up a money market account in the beneficiary's name and give the
beneficiary the choice of leaving the money in the account or withdrawing
part or all of it.
Filing a life insurance claim
When an insured person dies, the beneficiary must file a claim to collect
the death benefit. The company has 60 days to pay the life insurance settlement
or notify the beneficiary of any problem with it. Ask the agent or company
for a claim form. You will need:
- Name of the insured
- Policy number
- Certified copy of the death certificate
Special circumstances may arise if the beneficiary is a minor.
Settlement options
You may have a choice of ways to receive a death benefit settlement.
- Lump sum payment: the company sends you a check for the full amount.
- Installment payments with interest.
- Checking account: the company may set up a money market checking account
in your name; you receive a check book and can withdraw money whenever
you want.
- Let the company hold the benefit and pay you interest.
Interpleader
If there are conflicting claims (such as you and another person both claim
to be the beneficiary) the company may turn the money over to a court. The
court will hold the money until it decides who deserves the settlement.
This process is called interpleader.
Contested benefits
Insurance companies can refuse to pay death benefits, under certain limited
circumstances, if you die within the first two years of a policy. The company's
reasons could include:
- The insured (now dead) committed fraud when applying for the policy.
- The insured did not disclose a material fact on the application.
- The insured committed suicide.
A weird happening can waive the two-year limit: If a beneficiary intentionally
killed the insured person, the company can refuse to pay a death benefit
no matter how long the policy has been in effect. This is true even if a
court has not convicted the beneficiary of the murder.
Finding the life insurance company
What if you know someone was insured, but you can't find the policy, and
don't even know what company he or she had it with? This is not an unusual
problem, and there are no easy solutions. Of course, it is best to find
out about life policies while the insured is still alive. Places to look:
- If the house and car were insured, start with the local agents who
sold those policies.
- Insurance companies usually keep track of customer names and Social
Security numbers.
- If the policy was active, a premium notice eventually will come in
the mail.
- Look for cancelled insurance checks.
- Private firms specialize in finding lost life insurance for a fee.
Search the Internet for "Life Benefits Search" or "Lost Life Insurance
Finder."
Accelerated death benefits
Note that some life insurance policies permit you to "accelerate" the death
benefit. Accelerated death benefits make it possible to collect on your
own life insurance before you die. Some companies call this the "living
benefit" provision. Accelerated death benefits:
- May be built into the policy or offered as a rider.
- Are intended to let you use death benefits to pay hospital or medical
bills connected with terminal illness.
- Generally require that you have a terminal illness, backed up by a
doctor's prediction that you will die within a short time (the amount
of time will be specified in the policy).
- The dollar amount you can take out may be limited by the policy.
|
Your request
will be processed and/or referred to a licensed agent in your state.
Stephen Jarvis is licensed to sell life insurance and health insurance in the following states:
California License #0C94325, Florida License #D072714
Alabama, Arizona, Colorado, Georgia, Iowa, Illinois, Indiana, Kansas, Louisiana, Maryland, Michigan, Minnesota, Missouri, North Carolina, South Carolina, New Jersey, New York, Ohio, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin |
