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How To Get The Most Out Of Your Life Insurance Benefits
Article 6 of 7 in What to Know About Life Insurance Beneficiaries
If you are recently widowed you may need the life insurance benefits left by your spouse in order to help with funeral costs or everyday expenses going forward. Life insurance benefits are designed to help you move forward financially, and it is important that you know how to make the most out of what your spouse intended for you.
TIP: Managing a life insurance claim after the death of your spouse can sometimes be stressful, so do not hesitate to get an agent or attorney to assist you with the process of finding a policy, filing a claim, and managing the money.
If Your Spouse had a Life Insurance Policy
Filing a life insurance policy claim should be relatively simple if your spouse had a life insurance policy. Contact the life insurance company that provided the policy and find out what you need to do in order to collect on the benefits you are owed.
TIP: You will need to know how you want the money to be paid. You can get a retained asset account or you can get the money paid to you in installments or even a lump sum. Consult with a life insurance agent if you have any questions about how to receive a death benefit payout from your spouse's life insurance policy.
If Your Spouse Did Not Have a Policy, but You Do
If you have your own permanent life policy then you may be able to take a loan out on your policy to pay for your spouse's funeral and burial expenses. You must have enough cash value accumulated in order to take the loan and must be able to pay it back. Loans that are not paid off can reduce your death benefit so you do need to pay it off in order for your beneficiaries to receive their entire death benefit.
If you do not have enough cash value accumulated to take a loan or if you have a term policy (which does not accrue cash values) then you might consider a life settlement. In a life settlement, you sell the ownership of your policy to an investor and you receive a one-time payment for the policy. The beneficiary is changed and your heirs will no longer be appointed to receive benefits upon your death. A life settlement is not the right answer for everyone, so make sure you understand the transaction fully before you commit to it.
TIP: Taking out a policy loan or selling your policy can be complicated. You should ask an experienced life insurance agent any questions you have about selling your policy prior to taking any action.
Finding a Life Insurance Policy
A person may have had a policy but the family is not able to locate the policy paperwork. Finding a life insurance policy might not be necessary in order to collect the benefits because policies are not claimed exclusively by showing documents. Insurance companies keep the insured individual's electronic records including their death benefit, cash values and their beneficiaries.
- When you know the company: If you are the beneficiary of a life insurance policy simply call the insurer who issued the policy and find out how to submit a claim. If your claim is in order and the company confirms you as the beneficiary, they will send you your benefit once the claim is approved. You might not know exactly who your spouse's beneficiaries are (they may have changed it after filing the original application), but the insurance company does.
- When you don't have any information: There are cases where a spouse or family knows that there was insurance but they have no idea of the insurance company where the life insurance was placed. Finding a life insurance policy without the company information can be difficult, but is not a total loss. Try contacting financial or legal advisors like CPA's, attorneys or bankers that your love one would have dealt with in handling his or her affairs. Call your spouse's previous employer. Also, check with any trade unions or professional organization to see if you find a life insurance policy taken out with them. See our article on finding a lost life insurance policy for other things you can do to find your spouse's lost life insurance policy. You will need to act as an investigator!
What if the Premium Payments Were not Current
Life can be extremely busy, especially during times of sickness and death. You may have found that you or your spouse forgot to pay your life insurance premium. Nonpayment of premium does not always result in a policy lapse. There are often safety measures called non-forfeiture options that kick in when a premium isn't paid.
- Automatic policy loan: On a cash value or whole life policy, these measures can include what's called an applied premium loan. If your policy has this feature, it will borrow money from your cash values to apply as premium payment.
- Waiver of premium: There may also be a waiver of premium rider that your spouse activated before his or her death. If this is the case, then there could have been no premium payment due.
- Collecting cash value: Even if the policy was unpaid and lapsed, you may still be eligible to receive a check for any accrued cash value of the policy. If you are unsure about how to obtain the cash values, call your spouse's insurance company and explain your situation to them. Be sure that you have a copy of the death certificate to supply to them. If you are not the owner of the policy, it is likely that they will not give you any information until you have furnished proof that your spouse is deceased.
When all the dust settles from claiming life insurance benefits and paying final expense cost you may realize that you still need life insurance for yourself. A quote on a final expense burial policy or a small term policy is easy to obtain. Click here to use Free Advice and get a quote today!.
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