Find out what happens to a life insurance policy when the owner dies and what you need to do if you're the beneficiary on the policy.
Information courtesy of USAA Life Insurance Company and USAA Life Insurance Company of New York When it comes to life insurance, many people avoid sharing their plans with loved ones. It's hard to find the right time, and the conversation has the potential to be uncomfortable. But it's important to discuss your end-of-life plans and reassure the people you care about that they're provided for after you're gone. Life insurance is pretty cut-and-dried. You sign up for a policy, pay the premiums and, in some cases, don't have to think about it again. But your beneficiaries might not know what's involved or what's required of them if you die. Here are a few things to keep in mind if you're navigating a death benefit claim.
In the case where the owner dies, but they're not the insured, it could cause a host of potential issues. It becomes more complicated if the owner did not name a successor owner to take the policy. In that case, the policy would go through probate to determine the new owner. Unfortunately, that new owner might not have been the original owner's preference.
One of the most common questions is: Do life insurance companies contact beneficiaries?
Most insurance companies attempt to contact beneficiaries. But that's only if they're aware something happened. In most cases death benefits aren't paid out unless someone files a claim.
Even then, there could be cause for delay. For one, the insurance company may not have up-to-date information for the beneficiary. After all, policies can be in effect for years and owners often forget to update their beneficiary contact information.
The takeaway? It's a good practice to have beneficiary and estate planning conversations with your loved ones, so they can be aware and prepared.
If a loved one has died, you might find yourself wondering how to claim a life insurance payout. First, you want to find out whether a policy exists.
Need to find a life insurance policy for a deceased parent or other insured person? Follow these two steps:
Most life insurance claims get paid within 30 to 60 days. Many states give insurers 30 days to review the claim; after the review, they can pay it, deny it and tell you why, or ask the beneficiary for more information.
Several situations could delay payment. For example, if the policyholder dies within the first two years of the policy, it could cause delay while the company reviews contestability clauses. Payment also could be delayed in cases of homicide, a death caused by illegal activity or application fraud.
If your loved one was a USAA member, we're here to help. Our dedicated Survivor Relations team can help you navigate this difficult time. We can connect you with the life claims department to check for a policy and to offer help filing a claim.
Don't let financial stress add to your grief. Let our Survivor Relations Team help you get through this difficult time.