One of the tasks following the loss of a spouse or family member is figuring out what life insurance policies were in place and contacting the insurance company or companies to find out how to file for claims. How long it takes to receive the death benefit varies, but for the most part, insurance companies try to move quickly.
A typical follow-up question: what happens if the beneficiary doesn't know about the life insurance policy? As Kiplinger explains in recent article, “How to Speed Up a Life Insurance Payout,” the more prepared the policy holder was, the quicker you can get the payout. That’s why at Family Estate Planning Law Group, we encourage our clients to align their assets with their estate plan.
We partner with our clients to ensure their assets that are to be held in trust are correctly titled. This is especially important with insurance contracts, as the contract and any beneficiary designations will trump any instructions in a will or trust. In some cases, your estate planning attorney may recommend an irrevocable life insurance trust, or “ILIT”, as one way to minimize the tax burden on your heirs. For more information on ILIT planning, take a look at our blog post on the subject.
If you have a copy of the life insurance policy and a copy of the death certificate when you file a claim, it will expedite the process. If you have these items available, it can take as few as five business days after filing the claim to receive the payout.
If the beneficiaries don't have any idea that they are coming into money from the life insurance policy, the insurer may track them down, but not always. That’s why we at Family Estate Planning Law Group strongly emphasize aligning assets with your estate plan: it’s one way to ensure that when it comes time to pay out an insurance policy, your heirs, in coordination with your estate planning attorney, will have the necessary information and knowledge of your assets to ensure your assets pass the way you intend.
This organization of assets and tracking what you own and how is crucial to an effective estate plan. In fact, at Family Estate Planning Law Group, we strongly encourage our clients to hold a Family Care Meeting to outline the basics of the estate plan and the roles and responsibilities of the trustees, health care agents, etc. Since your assets will likely change in type and value over time, there is no need to disclose how much you’re planning to leave to each person, but it is a good idea to ensure they understand their role in the event of your death or incapacity—it’s another great way to ensure your estate plan is effective.
For more information about the importance of aligning assets, verifying the correct alignment and tracking changes in assets over time (as well as more on holding a Family Care Meeting), explore our website and contact us to schedule your consultation today!
Reference: Kiplinger (June 7, 2017) “How to Speed Up a Life Insurance Payout”