Clear Focus Financial

The Settlement Process – What Your Beneficiary Can Expect

You’ve done all the right things; you’ve purchased life insurance and named a beneficiary. You know how important it is to name a specific beneficiary to ensure that the proceeds of your life insurance are protected from creditors and pass to your beneficiary on a tax-free basis. You’ve also connected with your insurance advisor to plan for your retirement and estate. You have all of your bases covered, well done! But what happens when that time does come and your beneficiary needs to claim the proceeds of your life insurance policy? It will already be a difficult time for your beneficiary and you want to ensure that the process does not add more stress. Below are a few of the steps that your beneficiary can expect during the claims process:

The Notification

Your beneficiary has two options:

  • contact your insurance advisor by email or phone, so your advisor can coordinate the life insurance claims process with them

  • contact your insurance company directly, online or by phone (most insurers have a designated notification page and dedicated phone contract for notifying them of the death of an insured)

The Paperwork

The insurance company will send the required paperwork to your beneficiary (or your advisor) with a request for information/evidence to help them process the insurance claim. This paperwork usually includes:

  • the completion of a claim form with some basic information

  • a death certificate (this is usually made available by the funeral home)

  • evidence of the beneficiary’s identity

Please also keep in mind that for claims on policies that are less than two years old, where the cause of death isn’t clear or where the claim is otherwise more complicated than usual, additional evidence or investigation may be required in addition to the standard paperwork mentioned above. This can most definitely delay the claims process.

The Settlement

When the claim is processed by the insurance company, the tax-free proceeds are payable to the beneficiary, usually in the form of a cheque. For straightforward cases, the claims process can take as little as 10-14 days. 

The Settlement Process – What Your Beneficiary Can Expect 2

The Next Steps

Where appropriate, your insurance advisor and other financial advisors will work with your beneficiary and any other interested parties to ensure that your intentions for the insurance proceeds are carried out. This will include providing the guidance your beneficiary may need with respect to the distribution of the insurance proceeds, especially as it pertains to fulfilling any written agreements you may have in place. 

To make this process a little easier for all parties involved, consider meeting with your advisor and beneficiary together to get the initial introductions out of the way (after all, your beneficiary will be working closely with your advisor in the future) and to ensure that all parties are on the same page in terms of your wishes and the overall claims process.