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How to Make a Life Insurance Claim

The promise of life insurance is kept when you die and the tax-free death benefit goes to your intended beneficiary (or beneficiaries). The steps to making a claim can be taken by your executor or beneficiary. They may not have much experience but the process is straightforward and help is available.

1. Inform the insurance company promptly

Insurance companies don’t read the obituaries and send a cheque for the death benefit automatically. They must be informed. An insurer’s current contact information is easily available online. Having the policy number will help. If your insurance advisor has provided consistent ongoing service, he or she should also be contacted.

The insurance company may require that the claim request be submitted within a year of death. The insurance policy usually has the specifics. Exceptions may be made but you shouldn’t delay making a claim.

In the United States, some life insurance companies knew their clients died but didn’t notify the beneficiaries, according to a recent episode of 60 Minutes. Hopefully, this doesn’t happen in Canada.

2. Ask what to do

Insurance companies are good at paying legitimate death claims quickly. They keep refining their processes and forms. Getting the latest instruction directly from them or through your insurance advisor reduces frustration, prevents mistakes, and saves time.

3. Do what’s asked

Specific information must be provided, including a claim form and a death certificate.

There’s often more scrutiny during the first two policy years (called the contestability period). With complete information, claims can be paid within one to two weeks. Reviewing deaths that occurred outside Canada and the United States may take extra time.

That’s about it. The process is simple.

Life insurance tips

When well planned, the death benefit can bypass the estate of the deceased and be paid directly to the beneficiary. There are no estate administration taxes (previously called probate fees). The death benefit is generally tax-free, paid quickly, and protected from creditors.

You help your beneficiary (or beneficiaries) in advance when you:

  • Put suitable life insurance in place—You’ll find other articles on our blog here to help you do that.
  • Keep your insurance policies up to date—This includes making sure that your premiums are paid, informing the insurance company if you move, and making sure you have the intended beneficiaries on file.
  • Make the insurance policies easy to find—Besides personal life insurance, you may have protection from your employer, an association, a credit card, or a mortgage. You don’t want any insurance to be overlooked.

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Flickr: GotCredit