Sounds simple enough. Life insurance pays benefits to the beneficiary listed on the life insurance policy when the policyholder dies. But the payments are not issued automatically and life insurance companies are not informed immediately when their policyholders pass on. Just like in auto insurance or property insurance, you have to file a claim if you want to collect any benefits.
The life insurance paperwork
As a beneficiary, if you need to collect the benefits of a life insurance policy, filling out paperwork is probably the last thing on your mind. Life insurance companies and life insurance brokers try to make the process as easy as possible, however there are certain pieces of information and documents that are required to make the claim.
You will need to provide to the life insurance company or life insurance broker:
- An original, or certified copy of the policyholder's death certificate
- Proof of identity as the beneficiary
- A familiarity with the policy so that you are aware of your payment choices
Usually the life insurance claim process is very quick. You complete a proof of death form and attach the death certificate. If there is more than one beneficiary for the life insurance policy, you will each need to fill out your own forms as part of the same claim.
You should usually expect to receive your benefits within the week. Life insurance claims are usually paid quickly. One of the only things that can really hold up a life insurance claim is if the death certificate is a copy or is not valid.
Multiple life insurance policies
Most people are aware if they are a beneficiary on an individually-owned life insurance policy. If you are in the unfortunate circumstance of having to make a life insurance claim, a little research may uncover more than one life insurance policy. It is very common for people to have life insurance through several different channels. Since benefits are only paid if a claim is made, if you are unaware of any extra life insurance coverage the person may have had, you may not be claiming the maximum benefits to which you are entitled.
Employer group life insurance policies
Some employers offer life insurance benefits to their employees at no cost. If the person who has passed away was employed at the time, they may have a life insurance policy through their employer. It also common to purchase additional life insurance from an employee group plan. Check the deceased person's pay stubs to see if any life insurance premiums were deducted or contact the employer directly.
Mortgage life insurance policies
It is common for most banks to offer insurance to all people approved for a mortgage. This is a special type of life insurance that pays off the remaining balance of a person's mortgage if they should pass away. If the deceased person still has a mortgage, check with the financial institution that granted the loan.
Credit life insurance policies
Life insurance policies are often offered by banks when you apply for a credit card or a line of credit. Since this is a policy that must be purchased individually, there should usually be a copy of the policy in the deceased's files. If not, you can contact the person's bank to ask if such a policy exists.
Accidental death and dismemberment insurance policies
Accidental death and dismemberment policies are also often offered by banks when you apply for credit but they only pay benefits if the person died accidentally. Again, there should be a copy of this type of insurance policy in the deceased's files. If not, you can contact the bank to inquire.
Travel insurance policy
If the person was travelling when they passed away, they may have purchased a travel insurance policy from a travel agent before they left. Travel insurance is also sometimes offered by credit card companies if the plane/boat/train tickets were purchased with their card. Some travel and road clubs like the CAA will also offer their members automatic travel accident insurance. As the deceased person's beneficiary, check each of these options to see if you are eligible for any life insurance benefits.
Car insurance policy
If the deceased person was killed as a result of a road accident, whether they were in a car or crossing the street, death benefits are available through the person's car insurance policy. Accident Benefits are mandatory coverage on all Canadian auto policies and can be claimed on top of any other life insurance policies that may exist. Contact the deceased person's auto insurance provider if you think you may be entitled to this benefit.
Lost life insurance policies
If you are unable to locate a life insurance policy for someone who has passed away, but you have a strong reason to believe that a life insurance policy was purchased, you can contact the Canadian Life and Health Insurance Association. They will help you do a search by sending out the deceased's information to all member life insurance companies. If one of the companies has a policy for the listed person, they will contact you.