In most cases an insurance claim will be paid out within 10-14 business days provided you are the beneficiary named on the policy. This is usually paid by check or it can be electronically transferred to your account.
When the insured individual passes away you will need to file a claim. This involves filling out documents and sending the information over to the insurance carrier. Whether you are the only beneficiary on the account, or if there are multiple beneficiaries the process is the same for each primary beneficiary listed. However; with multiple beneficiaries, the process can take a bit longer. To offset this, each state has a law mandating that the beneficiary will be paid in 30 or 45 days or the insurance company will face monetary penalties that must be paid to you. This is called “statutory interest” and can easily add up to over a thousand dollars a year, this is a very rare situation and is usually due to extenuating circumstances or legal issues.
The insurance company will offer a lump sum which is the full amount of the policy, or they will offer payments. If you choose the lump sum you will receive one payment, tax free, for the entire face amount of the policy. The payment option will provide you with an annual payment for a percentage of the face amount of the policy. Everyone’s situation is different immediately following the loss of a loved one, for some people the lump sum is needed to keep the household afloat and handle immediate expenses, for others it is easier to manage an annual payment. The insurance carriers are very flexible in this regard and will work with you for either option.
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