05/07/2020
9 Things Life Insurance Beneficiaries Should Know
1. No need for paper policy to make a claim
Just know the insurance provider and inform them of the death of a client and secure the claim form.
Furnish them a certified copy of the death certificate together with the filled up claim form.
2. Life Insurance Pay-out is Tax-Free
You don’t have to report life insurance proceeds as income no matter how large the amount is, so it’s paid absolutely tax-free to beneficiaries.
3. You might not get the full policy face amount
If the policy was a cash value life insurance, and the policy owner took a P50, 000 loan from the cash value and didn’t pay back before death, life insurance pay-out will be reduced by P50, 000 plus the loan interest.
4. The company can only pay the people listed as beneficiaries
An insurance company is obligated to pay only claims made by the beneficiaries listed on the policy. The life insurance contract also overrides any heirs named in a will. Any claim not listed on the policy is inconsequential.
5. You don’t have a right to know who other beneficiaries are
The life insurance contract outlines each beneficiary’s percent of the pay-out. It’s possible that you could make a claim and find that you’re one of the multiple beneficiaries. So who are the other people? The life insurance company keeps that private. Similarly, someone who’s not the policy owner can’t call up the life insurance company and finds out who the beneficiaries are on someone else’s policy.
6. You might not know if the policy lapsed
If a policy owner stopped paying and let a policy lapse, there’s no pay-out to collect. If the payments stopped recently because the policy owner was ill in the last month of life, you can likely pay the back premiums and still make the claim.
7. Don’t wait for a life insurance company to find you
If you know you’re a life insurance beneficiary, you should be proactive and contact the company to make a claim. A life insurance company doesn’t necessarily know right away that an insured person has died.
8. Insurers offer choices for the claim
Lump-sum, equal installments over five years, regular payments for the rest of the beneficiary’s life. But once the beneficiary dies the payments stop, even if the original death benefit hasn’t been fully paid yet. And other possible options.
9. You’ll probably have the money within a month
Once you’ve submitted the claim form and death certificate, payment can be fast. Generally within a month.
