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HOW TO GET LIFE INSURANCE PAYOUTS

Losing a loved one is an incredibly difficult experience, and navigating the practicalities afterward can feel overwhelming. If your loved one had a life insurance policy, you might be wondering how to access the funds and manage their affairs.

Firstly, it’s essential to understand that life insurance payouts may not be subject to the terms of your loved one’s will.  Therefore, even if your loved one didn’t leave a will, you may be able to access the insurance proceeds if you’re named as a beneficiary on the policy or if you are the owner (or joint owner) of the policy.

IDENTIFYING THE POLICY

The first step is to locate the life insurance policy. This might involve searching through your loved one’s personal documents, contacting their employer or financial advisor, or reaching out to insurance companies directly. Look for any paperwork, statements, or correspondence that might indicate the existence of a policy.  Your loved one’s banks statements will also show if there have been regular payments to an insurance.

CONTACTING THE INSURANCE COMPANY

Once you’ve identified the insurance company, reach out to them as soon as possible. Notify them of the policyholder’s passing and inquire about the claims process. They will guide you through the necessary steps and paperwork required to initiate the claim.

IS PROBATE REQUIRED?

If your loved one was the only owner of the policy and they did not designate any beneficiaries of the policy, then you will need to obtain probate.  This is the process of having the Will “proved” in the High Court.  If there is no Will, then the closest family member will need to apply for Letters of Administration to have court approval to administer the estate.

PROVIDING DOCUMENTATION

The insurance company will typically require certain documents to process the claim, including:

• Death certificate: This is a vital document that proves the policyholder’s passing and cause of death.
• Policy information: Any details or paperwork related to the insurance policy will be necessary for the claims process.
• Your Identification: If you are the owner of the policy or the named beneficiary, then you will need to provide a certified copy of your ID.
• Grant of Administration: This is a document from the court confirming you have the right to administer the estate.  If there is a Will, this will be Grant of Probate.  If no Will, then a Grant of Letters of Administration.
• Medical records: often the insurance company will require medical records and/or the coroners report to confirm cause of death.

PROCESSING THE CLAIM

The insurance company may review medical records to ensure your loved one provided full disclosure.  The company may also review the cause of death to ensure it wasn’t excluded in the policy.  Processing the claim can take a few weeks before a decision is made.

DISTRIBUTING THE PROCEEDS

Once the claim is approved, the insurance company will distribute the proceeds according to the policy’s terms. If you are a designated beneficiary, you’ll receive the funds directly, typically in a lump sum payment.  If there are no beneficiaries designated on the policy, then the insurance company will pay to the administrator’s nominated bank account.  It will be up to you to distribute in accordance with the Will or the Administration Act (if there is no Will).

HANDLING OTHER AFFAIRS

While the life insurance payout may bypass probate, other aspects of your loved one’s estate may still need to be addressed, especially if they had other assets or debts. If there are no other estate planning documents in place, such as a will or trust, you may need to navigate the intestacy process or seek legal guidance to manage their affairs.

SEEKING SUPPORT

Losing a loved one is a challenging time, and it’s okay to seek support from friends, family, or professionals. Consider reaching out to a grief counsellor or financial advisor who can provide guidance and assistance as you navigate this process.  It is also recommended to seek legal advice.

IN CONCLUSION

Losing a loved one is never easy, and dealing with practical matters like life insurance claims can add additional stress during an already difficult time. However, by understanding the process and seeking assistance when needed, you can ensure that your loved one’s wishes are honoured, and their affairs are managed appropriately. Take things one step at a time and remember to prioritize self-care and support as you navigate this journey.