What You Need to Know About Collecting Life Insurance Proceeds

During the emotional period immediately following a loved one’s death, it’s helpful to understand exactly what steps are needed to access the insurance funds as quickly and easily as possible. The need to access insurance money may be very urgent if you’ve been financially dependent on the person who died and/or you are responsible for paying for the funeral or other expenses. If you're looking to collect life insurance proceeds as the policy’s beneficiary, we can help. Because all life insurance policies are different and some involve more complexities than others, we’ve outlined the typical procedure for claiming and collecting life insurance proceeds. If you need any support or guidance, contact us at Simpson Law Firm for a consultation.

Filing A Claim

  • Who is the beneficiary of the Policy? 

  • Notify the insurance company of the policyholder’s death, either by contacting a local agent or by following the instructions on the insurance company’s website. 

  • If the policy was provided through an employer, contact the insured’s workplace first, so they can put you in touch with the appropriate insurance representative.

  • Complete all forms requested by the Insurance company.

  • Some companies will request a W-9 (Request for Taxpayer Identification Number and Certification) from the IRS in order to process a claim. This is a common verification practice, and it doesn’t automatically mean the company suspects you of fraud or plans to deny your claim.



What to Do If There are Multiple Beneficiaries

If more than one adult beneficiary was named, each person should provide his or her own signed and notarized claim form. If any of the primary beneficiaries died before the policyholder, an alternate/contingent beneficiary can claim the proceeds. In that case, however, he or she will need to send in the death certificates of both the policyholder and the primary beneficiary.

If a Living Trust is the beneficiary, contact us, Simpson Law Firm, so we can create a certificate of trust that you (or the trustee, if the trustee is someone other than you) can send to the life insurance company, along with a death certificate, when it becomes available.



Minor Beneficiaries

If a minor child is named as a beneficiary: Even if you’re the child’s natural parent, unless you are specifically named as the guardian of the minor’s estate, you are not automatically considered the guardian of the child’s financial assets and must do the following;

  • Petition the Court to become the Guardian of the Minor Child’s estate in order to manage the funds until the child comes of age.  

  • Set up a trust to receive the proceeds. 

  • Name a Trustee to manage the funds for the child’s benefit.



Insurance Claim Payments

Life insurance claims payout fairly quickly. Occasionally, cause of death can hold up this process. Some claims are paid within one to two weeks of the start of the process, and rarely do claims take more than 60 days to be paid. Most insurance companies will offer you the option to collect the proceeds via a mailed check or transfer the funds electronically, directly to the beneficiary’s account. 

Life insurance proceeds can be delayed for a number of reasons. Beneficiaries often face delays if the policyholder dies within two years of the policy, during the contestability period. During this period, the insurance company can investigate the claim to ensure that the policyholder didn’t commit fraud on the policy application by lying about underlying health problems, family medical history, or other conditions.  If problems with the application are discovered, the insurance company might pay a reduced benefit or even deny the claim, depending on what is uncovered. Payouts may also be delayed when homicide is determined to be the insured’s cause of death and the beneficiary is a suspect. Other reasons insurance payouts may be delayed include:

  • The insured committed suicide within two years of the policy being issued.

  • The insured died during the course of illegal or criminal activity, such as a robbery or driving while intoxicated.

  • The insured omitted risky activities, such as smoking or skydiving, on the policy application.

Life Insurance is one of the many gifts you can provide for those left behind after your passing and is complimentary to  your Estate Plan. Contact us for more information. Next time we will address how to select the right beneficiaries ensuring your money is used for the purposes you wanted. 


This article is a service of Simpson Law Firm. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. We offer an Estate Planning session, during which you will get more financially organized than you’ve ever been before and we will assist you to make all the best choices for the people you love. You can begin by contacting us here, https://www.hollysimpsonlawfirm.com/contact-us or calling us at 803-764-9555 and one of our friendly client service assistants will help you set up your consultation!

Holly Simpson