How Do Beneficiaries Collect Life Insurance Benefits?
A Money Girl listener asks a question about life insurance beneficiaries. How does an individual collect the payout after the insured person’s death?
Laura Adams, MBA
Q. I want to understand what will happen with my life insurance when I die. Will the insurance company come and find my wife to give her the benefits, or will she need to claim the money from them?
Answer. It’s not pleasant to think about our own death, but life insurance is a really important topic. It’s a contract between you and an insurance company to pay a benefit to one or more named beneficiaries if you die. It could be a financial lifeline to keep your loved ones safe if you weren’t around.
(correction_with_script)
Unfortunately, one in 600 people are the beneficiary of an unclaimed life insurance policy. In recent years, insurance companies have come under increased pressure from state and federal governments to do a better job in locating beneficiaries.
But despite their efforts, there’s still over $1 billion in unclaimed life insurance benefits out there!
So never rely on an insurance company to find your loved ones because benefits are not paid automatically. It’s up to you to make your beneficiaries aware of your policies and how to collect the payout if you die.
Your beneficiaries will need to contact the insurance company by phone or online to inform them of your death, submit a claim, and provide a death certificate. If your policy is purchased through an employer, your beneficiary should contact the human resources department or benefits administrator.
Instead of risking any confusion, create a simple legacy checklist that lists your most important insurance and financial information. Then send it to your beneficiaries or keep it with other emergency documents, such as a will and healthcare directives. You and your family will be glad you did.
Click here to download the Legacy Checklist PDF now!
Other Links You Might Like:
How to Find Lost Life Insurance Policies
Who Needs Life Insurance? You Do!
5 Facts to Know About Term Life Insurance
35+ Best Financial and Productivity Tools
Connect with me around the web on Facebook, Twitter, and Google+
Click here to Download 2 Free chapters of Money Girls’ Smart Moves to Grow Rich
Get the Money Girl Book!
Looking for more money advice or a great gift? Pick up a copy (or several!) of Money Girl’s Smart Moves to Grow Rich. It tells you what you really need to know about money without bogging you down with what you don’t. Get the paperback or ebook today!
Clay People Protected image courtesy of Shutterstock
About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.