How Long Does Life Insurance Take to Pay Out?

To receive a life insurance payout, you must confirm you are the beneficiary by contacting the life insurance provider. And if you are the beneficiary, then you are responsible for filing the claim. You will need several documents to settle the claim quickly.

The documentation required may vary depending on the insurance provider and the face value of the policy.

For example, with American International Group (AIG), if the death benefit is $15,000 or less, a funeral service program or the funeral home bill would suffice as proof. If the benefit amount is between $50,000 and $100,000, a copy of the death certificate is required, but it doesn’t have to be notarized. When the face value goes above $100,000, only a death certificate is permitted, and it must be notarized.

Since document regulations vary, it’s best to have several notarized death certificates on hand to avoid delays. If the paperwork is sent quickly and all is in order, the wait time to process is typically seven to 10 business days.

You can receive your life insurance payout as soon as two weeks if you file your claim quickly and include all the necessary documents.

However, the more realistic range is between two weeks and two months. Many factors, such as waiting to file the claim, can influence how quickly you receive your pay out.

In extreme cases, like a suspicious death or medical fraud, some claims may be denied after an investigation. Learn what circumstances can delay claims to help ensure an easier payout process.

If the insured individual is murdered, committed suicide or passed away from high-risk or illegal activities, the insurance claim will likely be investigated. For example, if the policyholder was murdered, the beneficiary will need to be crossed out as a suspect. High-risk activities that aren’t covered under certain policies include skydiving and snowboarding.

Most life insurance policies have a contestability period, which is the first two years of owning the policy where the insurer can review application answers. If the policyholder passes away within the contestability period, the life insurance company can investigate the claim. Investigation can take up to a year, which may delay your payout. In the end, your claim could be denied.

If the policyholder lies on their application about their health, like a pre-existing or life-threatening condition, there will likely be an investigation for fraud. Should the life insurance company conclude the policyholder committed fraud, then no death benefit will be paid.

But if the policyholder is honest on their application and divulges any conditions, the beneficiary should receive a guaranteed payout.

Insurance companies typically send the beneficiary a claim form to provide detailed information about the policyholder. The claim form also requests how the beneficiary would like the death benefit paid. If you fail to fill out any section of the form, it may delay your payout.

If you go to file a claim and an investigation reveals that the policyholder stopped paying their premiums before they passed away, then the delayed status will change to denied.

The two most common types of life insurance payout options are in the form of a lump sum or an annuity. Depending on your circumstances, one could be more beneficial to you than the other.

With an annuity, you’ll receive your payout in fixed installments. You can spread out your payments between five and 40 years. This ensures controlled payments for a set period of time.

If you choose a lump-sum payment, you receive one tax-free imbursement. This is the most common payout option since it instantly provides the beneficiary with ample funds to cover any death expenses.