Collecting Death Benefits

In order to process a death claim, most companies require a properly completed claim form, a certified copy of the insured’s death certificate and the policy contract. If the policy has been lost, the company will typically require the beneficiary to complete a lost policy certification.

Once the company receives satisfactory proof of loss (defined below), the company has 30 days to pay the claim before interest on death benefits will start to accrue. If the claim is paid after this 30-day period, the total amount of the claim payment will include interest, calculated from the date of death, at a rate not less than the then current rate of interest on death proceeds left on deposit with the insurer.

If the insured dies during the contestable period or from accidental or unusual means, in addition to satisfactory proof of loss (defined below), the company may require additional documentation such as police reports, autopsy reports or medical records. 

Satisfactory proof of loss as defined in NCGS 58-58-110(a) is:

  • a certified copy of the death certificate,  OR 
  • a written statement by the attending physician containing (1) the name and address of the physician who must be duly licensed to practice medicine in the U.S. (2) the name of the deceased (3) the date, time and place of death, and (4) the immediate cause of death

Once a claim is approved, the beneficiary may have a choice of how to receive the benefits. The more common settlement options are:

Tab/Accordion Items

The company will send the beneficiary a check for the full amount of the death benefit.

The company places the benefit in an interest bearing checking or draft account from which the beneficiary can withdraw the funds (partially or in total) at any time.

The insurance company holds the death benefit on deposit for the beneficiary. Interest accumulates on the funds in accordance with policy guarantees and/or excess rates declared by the company. The beneficiary is able to withdraw the money at any time.

Equal payments are periodically paid to the beneficiary until all benefits have been exhausted. Interest accumulates on the unpaid balance.

Equal payments are made to the beneficiary over a specified period of time. Interest accumulates on the unpaid balance.

Proceeds (calculated and based on the beneficiary’s life expectancy) are paid to the beneficiary in equal payments for life. A guaranteed amount of payments may be established.

Accelerated Benefits, sometimes referred to as “living benefits,” is a policy provision that provides life insurance benefits to insureds diagnosed with terminal illnesses. Depending on the contract, other qualifying events may also trigger benefits, such as being permanently confined to a nursing home or requiring an organ transplant. Qualifying events can differ from contract to contract. The policy may limit the amount that can be paid.

The policyowner may have to pay an additional premium for this benefit. Also, any amounts paid will generally reduce the death benefit paid to the beneficiary.

If you accept an accelerated benefit payment, you may become ineligible for Medicaid or other governmental benefits. Also, the benefits may be taxable. We suggest that you consult with your legal and financial advisors to determine whether or not this may be the case in your individual situation.