By Eileen Ortega, CTFA
Throughout our lifetimes, we wrestle with decisions around life insurance. We often insure ourselves and our spouses through our employer, in addition to policies we purchase outside of our employment, to make sure that in the event something happens, the surviving spouse will not have any financial worries.
However, there is a big difference between planning for this possibility and actually claiming the benefit when we lose a spouse. The first is a “hypothetical” decision, and the latter is often fraught with emotion.
Fortunately, the process of submitting a life insurance claim is relatively simple and fulfills its purpose of providing immediate financial relief to the survivor. This article covers the steps on how to file a life insurance claim after a spouse has died.
Identify and Organize Policies
It is helpful to have a list of the policies for which your spouse was the insured. If you are unsure where to start, you might begin by consulting with your financial advisor, who should be familiar with the policies in place and the insurance companies through which the policies were purchased.
If you are filing a claim on your own, reviewing your financial files or checking account may help determine if and when premium payments were made on the policies.
In addition to individual policies your spouse may have had, if they were still working, the company’s benefits representative can provide you with information on any employer-sponsored policy.
Once you have located all policies, the next step is gathering the information needed to submit the claim for the insurance proceeds.
File Life Insurance Claims
The following documents are included when submitting claims:
- Certified Copy of Death Certificate
- It is important to ascertain from the life insurance company whether they require a certificate that specifies the cause of death. Not all death certificates list this information, so it’s important that when requesting copies from the funeral home, you ask for some of the death certificates to include this information.
- Claim Form for Policy
- For each policy, you need to complete a claim form to submit with the required documentation. These forms can be found online through the insurance company website or by contacting the insurance company directly and requesting the form be mailed to you.
For each policy, a claim form must be completed with information related to both the insured and the beneficiary. This will include, for example, name, date of birth, date of death, and Social Security number. Once completed, you submit the form, along with the supporting documentation, to the insurance company for review and processing.
This claims process typically takes between 30 and 60 days.
Who Is the Owner and Who Is the Beneficiary?
In completing the claims process, it is important to identify how the policies were owned and who they benefit.
- Confirm ownership of the policy. When an individual owns their own policy, the face value of the benefit is included in the estate, despite the fact that the estate may not be the beneficiary of the policy. Since the IRS wants to ensure that all assets owned by the decedent are included in the inventory, this is crucial. It will not prevent you from claiming the policy proceeds, but it will factor into any potential estate taxes due. It is critical to keep your advisor and accountant apprised of this information.
- Confirm the policy beneficiary.If the beneficiary is someone other than you or your deceased spouse’s estate, you can notify the insurance company. However, the beneficiary will need to submit the claim for the proceeds.
Depending on the policy’s face value, the proceeds may be significant. If the estate is the owner or beneficiary, you want to hold the proceeds in an estate account until all administration is complete. The proceeds will be used to cover final expenses, including any estate or income taxes.
If you are the beneficiary of the policy, which is much more likely, you want to make sure that you alert your financial advisor so that the funds may be incorporated into your plan.
In addition, you want to wait before making any drastic financial decisions that could impact you in the long term. My experience in working with surviving spouses is that they often want to give the proceeds to children, grandchildren, and charity—but you should ensure you have a secure financial footing before making such decisions.
If you have questions about how to move forward financially, you may want to talk with a financial advisor who works with surviving spouses. Our fiduciary wealth management firm in Ponte Vedra Beach, Florida, offers a complimentary consultation. We invite you to schedule a consultation today.