A life insurance policy is a legal contract between an insurance provider and the policyholder. The policyholder pays the provider an agreed amount of money and in the event that the policyholder dies or contracts a critical illness, the money is paid to their beneficiaries. Beneficiaries are the ones named to receive the death benefits. Most parents take life insurance policies as financial security for their children. As a beneficiary, you should know the following things about your Parents Life Insurance.
1. The Insurance Policy Accounts
In the event of death, most children wonder did parent have life insurance? There are many cases of unclaimed life policies because most policyholders keep their life insurance a secret or forget to inform the beneficiaries. Also, not all insurance providers are mandated to contact the deceased family about death benefits. Therefore, it is up to you to find out if your loved one took life insurance that you can claim.
Look for a hard copy or soft copy of the policy document in their desk, or computer. This document has details on the provider’s name, policy number, and the date the policy began and expiration date. If you cannot find it, you should search for insurance databases for possible records.
2. How to File a Claim
It is ideal to notify the insurance company shortly after your parent’s death. The insurance provider will require proof of death and a signed statement of claim to process the payment. You should submit a copy of your loved one’s death certificate given by the funeral director. After this, you can choose to receive a lump sum or to receive the proceeds in smaller amounts over time. It is important to have an attorney just in case the insurance provider denies or delays your claim.
3. Covering Funeral Costs
Although it takes a while to process the life insurance claim, some insurance companies have policies that offer advances for funeral expenses. This financial aid will help your family send off your loved one without any complications. You should ask the insurance agent if the death benefits could cover the funeral costs.
4. The Policy Limitations and Exclusions
Many life insurance policies have exclusion and limit clauses that limit compensation in certain circumstances. The insurance provider uses these exclusions to reduce coverage for the risky events that they cannot insure. You should know the limits stated in the insurance agreement before making a claim. Most policies have exclusions on the cause of death being suicide, intentional acts, murder by the beneficiary, natural disasters and high-risk activities.
5. Existing Debts
The benefits you get do not have to cover your parent’s debt. However, if the debt goes unpaid, the property listed as collateral may be ceased. To avoid this, you should know your parent’s list of debts such as a mortgage, credit card, car, or personal loans. You can find out from their financial advisor or records then prioritize on paying them off before they accumulate and grow in interest rates.