If a loved one dies suddenly, life insurance payouts can be crucial for stabilizing a person or a family's finances in the aftermath of the event. In addition, depending on how long the policyholder was paying into it and the type of life insurance, the associated benefits may be quite substantial. However, regardless of the amount, it cannot do you any good if you cannot access it. This step-by-step guide leads you through the process of collecting a life insurance payout.

Step 1: Obtain a Certified Copy of the Death Certificate

First, get a certified copy of the insured's death certificate. You can either contact the county vital records office, or you may be able to get copies from the funeral home itself. Since a life insurance claim can take weeks to months to process, doing this step quickly ensures a timely payout.

Step 2: File the Claim

Next, you need to actually file the death claim with the life insurance company. This involves contacting them and submitting the necessary paperwork, including a certified copy of the insured's death certificate. As you may expect, the insurer requires the latter as evidence of the claim's validity and to obtain other relevant information, such as cause of death.

Unless the policy specified the payout method beforehand, it may also be necessary for you to decide on one. The options may include a lump sum, annuity payments, or installment payments. In simpler terms, you may have to decide if you would like to receive the full death benefit all at once or space it out over a number of years. If you have an immediate need for a large amount of money, then it may be best to choose a lump sum. Otherwise, it may be safer and wiser to collect smaller sums to help with regular expenses.

Step 3: Wait for the Insurer to Process the Claim

The third step is to simply wait. As certain situations may void the payout, the insurer must verify that none the exclusions stipulated in the policy applies. For instance, if the beneficiary murdered the policyholder, or the policyholder committed suicide within the first two years of the policy, the beneficiary would not be eligible to receive any benefits.

In addition, many life insurance policies include a clause that allows the insurer to delay benefits for six to 12 months if a policyholder dies within the first two years of the policy start date. This is to allow the insurer time to complete a thorough investigation to ensure insurance fraud has not taken place. Other complications sometimes arise and lengthen the claims process as well. However, in most cases, it should not take the insurance company more than a month or two to process the claim and make the payout.

Step 4: Take Care of the Payout

Most of the time, life insurance payouts come in the form of bank checks. However, you may also have the option of it being wired into an account. Regardless of what form it takes, when the money arrives, be prepared to handle it wisely. Often, this means putting it into an appropriate bank account to keep it safe for the time being. You may also need to take care of other details, such as taxes. Usually, life insurance payouts are exempt from income tax but not necessarily estate tax. The exact taxation laws can vary from state to state and policy to policy.

In many cases, people consult financial advisors to help them figure out exactly how they should manage the money so they can make the most of it and have it last. These professionals can help you look into investing options, setting up a trust, figuring out the taxes, and more.


Getting your life insurance payout quickly after the death of your loved one can help balance your finances in the wake of your loss and potential financial hardships. Following the aforementioned steps help you get your benefit promptly and save you from stress in the process.