How to Claim Life Insurance Benefits

A step-by-step guide to filing life insurance claims and making smart decisions with the proceeds.

Quick Overview

Filing a life insurance claim typically takes 2-4 weeks once you submit all required documents. Most claims are paid within 30-60 days. Don't rush major financial decisions while you're in early grief.

Step 1: Find All Life Insurance Policies

Where to Look

  • Home files: Check filing cabinets, desk drawers, safe deposit boxes for policy documents
  • Email: Search for "life insurance," "policy," insurance company names
  • Bank statements: Look for premium payments (monthly or annual charges)
  • Tax returns: May show deductions or premium payments
  • Employer benefits: Contact HR department - many employers provide group life insurance
  • Military service: Veterans may have SGLI (Servicemembers' Group Life Insurance) or VGLI
  • Union or professional associations: May offer group policies
  • Mortgage lender: Some mortgages include credit life insurance
  • Credit cards: Some cards offer life insurance benefits

National Databases to Check

  • National Association of Insurance Commissioners (NAIC) Life Insurance Policy Locator: Free service to help find policies - eapps.naic.org/life-policy-locator
  • National Association of Unclaimed Property Administrators (NAUPA): Search for unclaimed life insurance - unclaimed.org

Common Mistake to Avoid

Don't assume there's no life insurance just because you don't have paperwork. Many employers provide automatic coverage, and policies may have been purchased years ago. Do a thorough search.

Step 2: Gather Required Documents

You'll typically need:

  • Certified death certificate (order at least 10 copies from the funeral home or vital records office)
  • Life insurance policy document (policy number and company name at minimum)
  • Claim form from the insurance company
  • Your identification (driver's license, passport)
  • Proof you're the beneficiary (if your name isn't on the policy)
  • Marriage certificate (if policy lists "spouse" as beneficiary)

Additional Documents Sometimes Required

  • Medical records (if death occurred within 2 years of policy issuance - contestability period)
  • Autopsy or coroner's report (for accidental death or if cause is unclear)
  • Police report (for accidental death claims)
  • Attending physician's statement
  • Birth certificates of minor children (if they're beneficiaries)

Tip: Order Extra Death Certificates

You'll need certified death certificates for multiple purposes (Social Security, banks, creditors, insurance). Order at least 10 copies initially. They're much easier to get now than months later.

Step 3: Contact the Insurance Company

How to File

  1. Call the insurance company's claims department
    • Policy number should be on any policy documents
    • If you only know the company name, call their main number
    • Have the death certificate date and certificate number ready
  2. Request a claim packet
    • Can usually be sent by mail, email, or downloaded online
    • Ask about required documentation
    • Ask about the expected timeline
  3. Complete the claim form carefully
    • Answer all questions accurately
    • Don't leave blanks - write "N/A" if a question doesn't apply
    • Make copies of everything before submitting
  4. Submit all documents
    • Send certified copies of death certificate (not originals)
    • Keep copies of everything you send
    • Use certified mail with return receipt if mailing
    • Get confirmation if submitting online

Expected Timeline

  • Acknowledgment: Within 5-10 business days of receiving claim
  • Processing: 10-30 days for straightforward claims
  • Payment: 30-60 days from claim submission for most cases
  • Complex cases: 60-90+ days if investigation is needed

State Law Protections

Most states require insurers to pay interest on delayed claims (typically after 30-60 days). If your claim is taking longer than expected, contact your state insurance commissioner's office.

Step 4: Choose Your Payout Option

Insurance companies typically offer several ways to receive benefits:

Option 1: Lump Sum Payment (Most Common)

Pros:

  • Receive all money at once
  • Full control over investment and use
  • No ongoing relationship with insurance company
  • Can potentially earn higher returns by investing yourself

Cons:

  • Requires discipline not to spend unwisely
  • Must manage investments yourself (or hire advisor)
  • May be tempting to make poor decisions while grieving

Option 2: Installment Payments

How it works: Receive benefits in monthly or annual payments over a set period (e.g., $2,000/month for 20 years)

Pros:

  • Guaranteed income stream
  • Built-in spending discipline
  • Less risk of spending entire amount too quickly

Cons:

  • Lower total value (insurance company keeps interest earnings)
  • Less flexibility for emergencies or opportunities
  • May not keep pace with inflation

Option 3: Interest Income (Least Common)

How it works: Insurance company holds the principal and pays you interest

Pros:

  • Principal remains intact
  • Regular income

Cons:

  • Very low interest rates (typically 1-3%)
  • Can usually get better returns elsewhere
  • Your money is tied up with insurance company

What Most Financial Advisors Recommend

Take the lump sum BUT don't spend it immediately. Place it in a high-yield savings account or money market account for 3-6 months while you work with a fee-only financial advisor to create a plan.

What to Do With Life Insurance Proceeds

First Priorities (First 3-6 Months)

  1. Place funds in a safe, liquid account
    • High-yield savings account (currently 4-5% in 2026)
    • Money market account
    • Short-term Treasury bills
  2. Build or replenish emergency fund
    • Target: 6-12 months of living expenses
    • Keep in easily accessible savings account
  3. Cover immediate expenses
    • Funeral costs if not already paid
    • Outstanding bills
    • Urgent home repairs
  4. Pay off high-interest debt
    • Credit cards (typically 18-25% interest)
    • Personal loans with high rates
    • Payday loans or title loans

What NOT to Do Immediately

Avoid These Common Mistakes

  • Don't invest in risky ventures or give money to family members starting businesses
  • Don't make large purchases (cars, boats, major remodeling) in the first year
  • Don't pay off low-interest mortgage without financial advice (may not be optimal)
  • Don't let insurance company hold money at low interest rates indefinitely
  • Don't tell everyone about the insurance money (attracts scammers and requests)
  • Don't let others pressure you into "investing opportunities"
  • Don't work with commissioned salespeople claiming to be "financial advisors"

After 6-12 Months: Long-Term Planning

Once the fog of early grief has lifted, work with a fee-only fiduciary financial advisor to:

  • Assess your complete financial picture
  • Create retirement savings plan
  • Plan for children's education if applicable
  • Develop tax-efficient investment strategy
  • Update estate planning documents
  • Consider whether to pay off mortgage

Finding a fee-only financial advisor:

  • NAPFA (National Association of Personal Financial Advisors): napfa.org
  • XY Planning Network: xyplanningnetwork.com
  • Look for "fee-only" and "fiduciary" - they're legally required to act in your best interest
  • Avoid "commission-based" advisors who make money selling products

Tax Implications

Good News: Life Insurance Is Usually Tax-Free

Federal income tax: Life insurance death benefits are generally NOT subject to federal income tax.

State income tax: Most states also exempt life insurance from income tax.

Exceptions and Considerations

  • Interest earned: If you choose installment payments, the interest portion IS taxable as income
  • Estate tax: Very large estates (over $13.61 million in 2026) may owe estate tax
  • Transfer for value: If policy was sold or transferred before death, benefits may be taxable
  • Employer-paid coverage over $50,000: Coverage above $50,000 may have had taxable implications during your spouse's employment, but death benefit is still tax-free

Important

While life insurance proceeds are usually tax-free, consult with a CPA or tax professional about your specific situation, especially for large amounts or complex estates.

Common Claim Issues and Solutions

Issue: Death Within 2-Year Contestability Period

What it means: If your spouse died within 2 years of policy issuance, the insurer can investigate the application for misrepresentations.

What happens:

  • Claim will take longer to process
  • Company will request medical records
  • May require additional documentation

If claim is denied: You have the right to appeal and may need an attorney

Issue: Beneficiary Designation Disputes

Common scenarios:

  • Ex-spouse still named (common mistake)
  • Children from previous marriage vs. current spouse
  • Outdated beneficiary who has died
  • No beneficiary named (goes to estate/probate)

Resolution: Insurance company will hold funds until legal determination is made. May require probate court.

Issue: Suicide Within Exclusion Period

Policy provision: Most policies exclude suicide within first 1-2 years

What happens:

  • If within exclusion period: Premiums refunded, death benefit not paid
  • If after exclusion period: Full death benefit paid

Issue: Claim Denial

Common reasons for denial:

  • Material misrepresentation on application
  • Lapsed policy (missed premium payments)
  • Death from excluded cause (suicide within contestability, illegal activity)
  • Beneficiary killed the insured (legal exclusion)

If your claim is denied:

  1. Request detailed explanation in writing
  2. Review the policy carefully
  3. File an appeal with the insurance company
  4. Contact your state insurance commissioner's office
  5. Consult with an insurance attorney

State Insurance Commissioner Help

Every state has an insurance commissioner's office that handles complaints. They can investigate delays and denials. Find yours at naic.org

Employer-Provided Life Insurance

Group Life Insurance Through Work

How to file:

  • Contact the HR or benefits department immediately
  • Ask about claim process and timeline
  • Request claim forms and instructions
  • Ask if there are additional benefits (AD&D, dependent coverage)

Typical coverage:

  • Basic coverage: 1-2x annual salary (employer-paid)
  • Supplemental coverage: Additional if your spouse elected it
  • AD&D: Accidental death & dismemberment (may provide additional payout)

Timeline Urgency

Important Deadline

Many employer plans require claims within 30-90 days of death. Contact HR immediately even if you don't have all documents yet.

Military and Veteran Life Insurance

SGLI (Servicemembers' Group Life Insurance)

Coverage: Up to $500,000 for active duty, National Guard, and Reserve members

How to file:

  • Contact the branch's casualty assistance office
  • File Form SGLV 8283 (claim form)
  • Submit death certificate

Timeline: Usually processed within 3-5 business days once all documents received

VGLI (Veterans' Group Life Insurance)

For: Veterans who converted SGLI to VGLI after separation

Contact: 800-419-1473 or va.gov/life-insurance

VA Life Insurance (Service-Disabled Veterans Insurance)

Contact: 800-669-8477

Protecting Yourself From Scams

Common Life Insurance Scams Targeting Widows

  • "Advance fee" scams: Someone claims you need to pay fees/taxes before receiving insurance money (NEVER TRUE - legitimate insurers deduct any fees from the payout)
  • Fake insurance companies: Scammers claiming your spouse had a policy with them (verify with NAIC database)
  • High-pressure "investment opportunities": Salespeople who've heard about your payout
  • "Financial advisors" selling expensive products: Whole life, annuities with high commissions
  • Relatives pressuring you to "share": You're not obligated to give money to extended family

Red Flags

  • Anyone asking for payment before you receive insurance proceeds
  • Unsolicited calls about insurance policies you didn't know about
  • Pressure to invest immediately
  • Guaranteed high returns with "no risk"
  • Requests to send money via wire transfer, gift cards, or cryptocurrency

Frequently Asked Questions

How long do I have to file a claim?

There's no legal deadline to file, but it's best to file within 30-90 days. Employer plans may have stricter deadlines. The sooner you file, the sooner you receive funds.

Will I receive interest on delayed payments?

Yes, in most states. If the insurer takes longer than 30-60 days (varies by state) to pay a claim, they must pay interest from the date of death.

Can the insurance company deny a claim?

Yes, but only for specific reasons (misrepresentation, suicide within contestability period, lapsed policy, etc.). Denials are relatively rare for straightforward claims.

What if I can't find the policy documents?

You can still file if you know the insurance company name. Use the NAIC Life Insurance Policy Locator if you don't know which companies to contact.

Do I need a lawyer to file a claim?

Usually no. Straightforward claims don't require legal help. Consider an attorney if the claim is denied, contested, or involves complex beneficiary disputes.

What if my spouse named his ex-wife as beneficiary?

Unfortunately, life insurance pays according to the beneficiary designation, not according to the will or current marital status. This is a common and heartbreaking issue. Consult an attorney, but courts rarely overturn beneficiary designations.

Should I pay off my mortgage with the insurance money?

Maybe. It depends on your interest rate, other debts, income needs, and overall financial picture. Don't rush this decision. Consult a fee-only financial advisor first.

Checklist: Filing a Life Insurance Claim

Related Resources

Disclaimer: This is educational information only. For advice about your specific situation, consult with a qualified financial advisor, CPA, or attorney. Life insurance claims can be complex, and rules vary by policy and state.