If you have loved ones who depend on you financially, you will want to take the responsible action and include life insurance in your financial planning. Life insurance can be a source of support and relief to those left behind, and it can provide peace of mind for you to know you are doing the right thing.
While the concept of life insurance may seem simple, it is important that you understand the different kinds of policies, coverage and exclusions that may relate to your situation. Additionally, your loved ones will want to understand how they can claim their payout and what may cause the insurer to delay or deny benefits.
How life insurance works
You pay a monthly premium for your policy, and if you should die, the insurer sends your named beneficiaries the amount of the policy you purchased. If you own a whole life policy, the coverage lasts your entire life. Term insurance is in place for a certain period of time, such as 20 years, as long as you pay your premiums on time. In the event of your death, the insurer may take the following action:
- Review your beneficiary's claim for benefits, which usually takes about 30 days
- Request additional information about the circumstances of your death
- Investigate your policy if they suspect fraud
- Send your loved ones a payout in a lump sum or as installments, depending on your policy terms
Your loved ones can use this money for any financial need they have, such as paying off debt, taking care of household expenses or paying for the education of your children. If these are burdens you know your family may face after you are gone, it is important that you carry sufficient coverage to supply these needs.
When the insurer won't pay
The last thing you want is for your loved ones to wait and wait for an insurance payout they need and expect. If the insurer delays sending the payment, it could be for a number of reasons, including these:
- Suspicion of fraud in your application or other matters
- Waiting for results of criminal investigation if your death was homicide or your beneficiary is under suspicion of causing your death
- Death occurring within the two-year contestability period of the policy
When you apply for your policy, it is wise to read it carefully and ask many questions about the terms and exceptions that may leave your loved ones struggling financially after you pass away. Additionally, it is important that your loved ones know where in Oklahoma they can turn for help if the insurer unreasonably delays its investigation or denies their claim for benefits without good cause.