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7 steps for claiming a life insurance benefit

If you are the beneficiary on a recently deceased person's life insurance policy, you need to file a claim for the death benefit. If you don't, you probably won't see the money and you definitely won't be alone: Unclaimed life insurance benefits total at least $1 billion, according to Consumer Reports.

Don't think that it's greedy to think about life insurance after a person's death. The purpose of having life insurance is to help loved ones cope with the loss. The financial needs that arise soon after a family member's death can be significant, so there should be no shame in pursuing the money that the deceased wanted you to have.

Here are the steps to take to do this.

1. Get the policy details

With any luck, you're already aware of the deceased's life insurance policy and where it is located. Ideally, it will be stored in a safe place such as a metal filing cabinet or fireproof lock box.

However, you could have a slight problem if the policy was kept in a safety deposit box at the bank.

"In most states, safety deposit boxes are sealed temporarily upon one's death, which could delay settlement," says Whit Cornman, a spokesman for the American Council of Life Insurers.

If you're unsure of where the policy details are, common places people store important papers are nightstands, desk drawers and bookshelves. It's possible the deceased had life insurance through work or bought a policy independently from a life insurance company, so insurance agents and human resources personnel may also be helpful in tracking down policy information.

2. Check for other policies

Even if the deceased never mentioned them, there may be other insurance policies in place. These can include accidental death and dismemberment policies, which employers sometimes offer as riders to their insurance policies. Again, checking with the deceased's human resources representative can be helpful here.

If the deceased was killed while traveling and had travel accident insurance, you may be entitled to additional benefits. Check with representatives from the credit card used to buy the tickets and travel, as well as the road clubs to which the deceased belonged.

You should check for government benefits as well, says Insure.com Managing Editor Robert Beaupre.

Surviving spouses and children may be eligible for a small Social Security burial benefit, or for monthly survivor benefits. If the deceased served in the military, you may be eligible for some benefits if he or she served in a war zone or a service injury contributed to the death.

3. Contact the agent

You should notify the insurance company as soon as possible that the policyholder has died. Once you have found the life insurance policy, look through it for a contact name and number. If you know the name of the life insurance agent who sold the policy, he can help you file your claim.

"He can act as an intermediary with the insurance company," Cornman says. If you don't know the name of the agent, you should contact the life insurance company directly.

If the deceased had group life insurance through his employer, you can contact the human resources department at the employer about your claim. The deceased's pay stubs might indicate whether charges for additional group life insurance coverage occurred each month.

"If you are unable to contact the employer, you can contact the life insurance company directly," Cornman says.

4. Obtain copies of the death certificate

When filing a claim for the proceeds of a life insurance policy, you will need a certified copy of the person's death certificate.

"A death certificate is the standard form of documentation required when filing a state life insurance claim," Cornman says.

The funeral director can help you obtain certified copies of the death certificate. They usually will be sent to you by the vital records department in the state the person lived within a few weeks of the death. Usually there is a fee for each copy.

If your loved one is presumed missing and hasn't been declared dead, you won't have a death certificate. Under these special circumstances, you may need an acceptable alternative to the death certificate.

"In this case, a court order stating that the insured is dead or presumed dead may suffice," Cornman says.

5. Request claim forms

The representative of the life insurance company can help you obtain the claim forms you will need. You will need to complete the forms and gather all the information that the insurance company requests.

If you're too upset to fill out the forms yourself, ask your insurance agent or estate lawyer to help you. You will have to sign the form, however. All the beneficiaries named in the policy will have to fill out claim forms.

If you want your claim to proceed quickly, be sure to follow the directions from the insurance company carefully.

6. Choose how your proceeds will be paid

You may have several payment options available to you. They can include a lump sum, which may be a good option if you need to pay immediate expenses. It may also be possible to have the life insurance company pay you principal and interest in installments.

Another option with some policies is a life income option, which aims to stretch payments over your remaining lifespan. Some policies also have an interest income option where the company holds the proceeds and pays you interest, allowing the death benefit to remain intact. Upon your death, it will go to a second beneficiary of your choice.

In most cases, life insurance proceeds are not taxable. However, if you choose one of the options that pays you interest, the interest may be taxable as income. Check with your financial adviser before choosing your option, as settlement options sometimes cannot be changed.

7. Submit the completed forms

You will need to send back the completed paperwork and include a certified copy of the death certificate. Be sure to return the forms and death certificate via certified mail or with a return receipt requested so you can track it should it not arrive within a reasonable time. That way, you will also know when the forms arrive. Then it's simply a matter of waiting for your check to come in the mail.

"In most states, prompt pay laws require insurers to respond within a certain number of days," Cornman says. "However, the number of days can vary from state to state."

It can take a few days to a few weeks to see your check. But if you have done everything correctly, the benefit should be in your hands reasonably soon.

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