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Filing Life Insurance Claims

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					Filing Life Insurance Claims
If you are the listed beneficiary on a life insurance policy, it is your
responsibility to file a claim on the proceeds of the policy. In order to
do this, you'll have to furnish proof that the insured is dead. This may
seem trite at first, but life insurance companies are wise to protect
themselves from fraud.
Obtain as many copies of the death certificate as you can. If there is a
funeral or cremation ceremony the director can help you get hold of
these. In the rare case where there aren't any parting rites, contact the
hospital or facility wherein or nearest to where the insured died.
Next, contact the insurance company that underwrote the policy.
Preferably contact the field agent who wrote the insurance if he is still
with the company. You will need to take the insurance policy with you to
the meeting and "surrender" it in exchange for the money due you, and of
course you'll need ID to prove you are the person listed as beneficiary.
It can take a quality life insurance company up to two weeks to pay you
the money as the claim must undergo investigation, although it's possible
for you to have your money within a couple days. Virtually every time an
agent of the company will deliver your check or come do your payout
paperwork with you in person.
PAYOUT OPTIONS
Most commonly, beneficiaries take a lump sum payment. This is simply
asking the life insurance company to cut them a check for the grand total
amount of money the deceased was insured for, known as the death benefit.
But this is not the only payout option available, and the agent will want
to know what option you're choosing.
Another option that's not uncommon is that of Specific Income. With this
you'll receive an equal amount of the total death benefit every year f or
a stated period of years until it's all paid out. You can choose a second
beneficiary to receive the remainder of payments should you die before
receiving all the money.
Probably the most popular option after Lump Sum is Interest Income. With
this option the insurance company invests the death benefit for you and
you are paid the interest that the invested money earns but you aren't
paid any of the principal. You can name a beneficiary to receive a lump
sum payout of that principal when you die.
With the Life Income option, you can choose to receive an annual payment
for the rest of your life. The annual amount will be calculated based on
the total death benefit and the amount of years you are expected to still
live--this is known as "annuitizing" your payment. If you die before the
total death benefit is paid out the insurance company keeps what was left
over. You can also choose a variation on this, the Life Income with
Period Certain. With this option you are guaranteed an income for the
period you choose (usually a multiple of five years). The longer the
period the smaller the monthly or annual payments. If you die before the
period is up, another beneficiary of your choice receives the remainder
of the money. If you survive the payout period, payment s stop and you'll
need to rely upon another income source.
A Joint And Survivor Life Income annuitization option lets you vary this
yet more, and annuitize the payout based on two or more beneficiaries,
with the payments based on the death benefit plus the life expectancy of
the beneficiary who is expected live the LONGEST. The payout continues to
pass from beneficiary to beneficiary as one of them dies until the final
one has died.
WHAT TO DO WITH DEATH BENEFIT MONEY
The very first thing the majority of people do with their death benefit
proceeds--which are tax-free, by the way (if taken in a lump sum)--is go
on a vacation. But this is likely not the wisest of actions.
First, you should make sure all of the deceased's debts are paid off,
especially if it was your spouse. Also be sure any funeral expenses are
paid off.
Next, use the money to pay off any debts of your own. If there isn't
enough left to pay them all off, pay off or pay down as much of them as
you can.
If you still have money left over, consult with a financial advisor about
how to best invest it. But above all things, do not just go blowing the
money on things like vacations.
A FINAL NOTE
Taking the lump sum payout is the best option for at least 80% of all
beneficiaries. Using death benefit money for some kind of income should
never be considered without first talking to a financial advisor and your
accountant.
The author lives with her husband in Maryland, with their two dogs and
cat. She put together the website http://www.affordable -life-insurance-
guru.com in order to help the everyday person navigate the often
confusing world of life insurance

				
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