How to cash in life insurance policy after death

How to cash in life insurance policy after death

After the death of a loved one, beneficiaries need to know how to collect the life insurance and social security payments to which they are entitled, as the executor of the estate is not typically responsible for this task. Especially if survivors relied on the deceased person for financial support, they may need to get cash quickly for urgent and ongoing expenses such as mortgage and credit card payments. Well-informed survivors can generally access many sources of cash, which can include life insurance or Social Security survivor benefits. For other benefits that may be available to family members, see Claiming Pensions, Veterans, and Other Benefits: Information for Executors and Beneficiaries.

earnings from life insurance and annuities

An insurance policy or annuity is a contract between the company that sold it and the person who bought it. As a result, the proceeds do not go through the probate process (see How the Probate Process Works: Information for Executors), and the executor is not in charge of them. It is common for the policy beneficiary, not the executor, to deal with the insurance company and collect benefits directly. but executors can be asked to help beneficiaries claim payments to which they are entitled.

life insurance

Proceeds from life insurance policies can provide quick and welcome income for surviving family members after a death. the beneficiary will probably want to start the claim process as soon as possible. you will want to find the answers to the following questions:

  • What type of life insurance policies (term, whole life, or variable life) did the deceased have?
  • was there any credit insurance (to pay off credit card balances or sometimes amounts owed on major purchases like furniture) or mortgage insurance (to pay off a mortgage)?
  • Were the policies still in effect at the time of death?
  • Who are the beneficiaries?
  • how much will the company pay?
  • how to claim life insurance after death

    To claim life insurance benefits, the beneficiary should contact the insurance company’s local agent or consult the company’s website. Some companies ask beneficiaries to start by submitting a form that simply reports the death; they then send the beneficiary a package of forms and instructions explaining how to proceed. Generally, a beneficiary can request income simply by filling out the insurance company’s claim form and submitting it to the company along with a certified copy of the death certificate.

    If more than one adult beneficiary was named, each must submit a claim form. If the primary beneficiary died before the policyholder, then the alternate (contingent) beneficiary can claim the proceeds. an alternate must submit the primary beneficiary’s death certificate in addition to the policyholder’s death certificate.

    The time it takes to process an insurance claim can vary; a typical range is several days to several weeks after the claim is submitted.


    Annuities, like life insurance policies, are contracts with insurance companies. Annuities generally provide retirement income to the policyholder, but under certain circumstances may result in payments to a beneficiary. Unlike most other non-retirement plan investments, annuity earnings are not taxed until distributed. As with life insurance policies, you’ll want to get some basic information about annuities:

    • What annuity policies did the decedent have?
    • What type of annuities, fixed or variable, did the deceased have?
    • Do annuities have a death benefit (not all do)?
    • Who are the beneficiaries?
    • how much will the company pay? Generally, the insurance company guarantees that when the owner dies, the beneficiary will receive the greater of the annuity’s accumulated value (including earnings) or the amount originally invested in the annuity, less distributions.
    • To claim annuity benefits after the policyholder’s death, the beneficiary must request a claim form from the insurance company that issued the annuity. the beneficiary must submit a certified copy of the death certificate with the claim form.

      social security benefits: one-time death benefit

      The social security death benefit is relatively easy for surviving family members to claim and pays quickly, but it is currently a small lump sum payment of $255 (assuming the deceased had enough social security work credits). the surviving spouse or dependent children can claim this benefit. this payment is in addition to any ongoing survivor benefits to which the spouse or children may be entitled.

      Go to your local social security office to claim benefits. staff can help with paperwork and explain what information and documents, such as a certified copy of the death certificate, are needed. To find the nearest office, check the government listings in the phone book, use the Find Your Local Office service at www.ssa.gov, or call SSA toll-free at 800-772-1213.

      social security benefits: monthly survivor benefits

      Family members may also be entitled to monthly survivor benefits. You don’t have to be of retirement age to receive benefits: Dependent children, surviving spouses, and even some former spouses may be eligible for survivor benefits. The sooner family members apply for these benefits, the better, because some of them are not retroactive.

      Applicants can start the application process over the phone (800-772-1213) or online at www.ssa.gov, which can speed things up, but they won’t be able to complete the process without a personal interview. -face-to-face meeting with a staff member at an ssa office. Generally speaking, the following family members may be eligible for monthly survivor benefits.

      surviving spouses. A surviving spouse who is already receiving Social Security benefits based on the deceased person’s earnings need only report the death to SSA at 800-772-1213. SSA will change the monthly benefits to survivor benefits. If the spouse is already receiving benefits, SSA will check to see if the survivor benefit would be higher or not. the spouse will receive the higher amount.

      A surviving spouse who is not already receiving benefits or who is receiving benefits based on their own earnings record will need to apply for survivor benefits. eligibility for survivor benefits will depend on the survivor’s age and family circumstances. benefits are awarded to any surviving spouse who:

      • cares for the deceased person’s under-16 or disabled child (this is commonly called the “mother’s benefit” or “father’s benefit”)
      • is 60 years of age or older, or
      • Age 50 or older and become disabled within seven years of the worker’s death or within seven years of the mother’s or father’s benefit ending.
      • ex-spouses. Generally, divorced spouses are eligible for benefits under the same rules as surviving spouses, if the marriage lasted at least ten years and the divorced spouse does not remarry. marry before the age of 60. if, however, the former spouse is caring for the deceased’s young or disabled children, no matter how long the marriage lasted.

        Unmarried children. Dependent children of the deceased person are eligible for benefits if any of the following apply:

        • Are 17 years old or younger (or up to age 19 if attending high school full time). grandchildren and stepchildren may also be eligible under certain circumstances.
        • are disabled, regardless of age, and became disabled before age 22.
        • If the children are already receiving benefits, SSA will change the benefits to survivor benefits after the family notifies SSA of the death.

          Dependent parents. Parents who depended on the deceased worker for at least half of their support and who are at least 62 years old are also eligible for benefits.

          for more information

          nolo offers several resources to help you take the next steps. If you’re looking for more information on survivor benefits, check out the book Social Security, Medicare & government pensions, by joseph matthews (nolo). To learn more about claiming insurance and social security benefits, and everything else you need to know about settling an estate, get the executor’s guide: settling a loved one’s estate or trust, by mary randolph (nolo) .

          If you have a complex situation and need the advice of an attorney, you can also find an experienced estate planning attorney using the nolo attorney directory.

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