How Does Life Insurance Work After Death?

When you make the decision to buy life insurance, you get the peace of mind that your family will be taken care of should something happen to you. But what does that actually mean? How does life insurance work after death? If you’re the beneficiary of a life insurance policy, it’s important to understand not only how the death benefit works, but also how to file a claim should you ever need to do so. Here’s what to know.

Provide notice of the death 

In order to initiate a claim, you’ll first need to notify the insurance company of the policy holder’s death. While the process will vary by insurer, Northwestern Mutual will prepare and send you the necessary paperwork for submitting a claim after receiving notice of the death.

Gather relevant documents

The insurance company will likely require a few documents, which can be helpful to have ready ahead of time. While the exact documents will vary by insurer, Northwestern Mutual will require you to provide one or more copies of the deceased’s death certificate. When you are requesting death certificates, it’s a good idea to request multiple copies in case you need them for other purposes, such as pension benefits.

Submit the claim

The next step is to actually submit the claim. To do this, you will need to complete a claim form, at Northwestern Mutual it’s called a beneficiary claim statement. Depending on the insurance company, you will either need to mail in a physical form or you may be able to complete the form online. 

If you have any questions about what is required, contact the insurance company directly. If you end up submitting erroneous information, it could potentially hold up the processing time for your claim. Most insurers will provide representatives who can walk you through how to file a claim. 

If the life insurance policy was provided by the deceased’s employer, you may need to contact the company’s benefits manager, human resources administrator or union representative in order to file the claim. 

Wait for the claim to be processed

Once your claim has been received, the insurer will review your claim form and supporting documentation in order to verify the payout. At Northwestern Mutual, the review process is typically completed within 5 to 7 business days after receiving the necessary documentation. 

Receive the death benefit

How the life insurance death benefit is paid out is up to you. Most insurance companies will offer a number of different options, but the three main ones are transferring the money to an investment account, creating a stream of guaranteed income or taking the lump sum.

While you can choose to do one or even a mix of these options, your decision may come down to the size of the death benefit itself. If the payout is substantial, it’s important to think through how to best manage the money so that it can help provide you with financial stability. A financial advisor can help you understand your options and determine what might be best for your unique financial situation.