What Nobody Explains About Filing a Life Insurance Claim When You’re the One Left Behind

Nobody prepares you for the paperwork.

In the hours after losing someone you love, the world narrows to phone calls you never wanted to make, decisions that feel impossible, and a grief so heavy it makes even simple tasks feel like pushing through concrete. And somewhere in the middle of all of that, someone mentions life insurance, and you realize you have no idea where the policy is, what it covers, or what you’re supposed to do next.

You are not alone in that feeling. According to the National Association of Insurance Commissioners (NAIC), tens of millions of dollars in life insurance death benefits go unclaimed every single year, largely because beneficiaries lack basic information about their loved one’s policies. Not because the money isn’t there. Because nobody showed them what to do.

When my father passed away, I had served in the Navy, managed complex logistics under pressure, handled situations most people never encounter. None of that prepared me for sitting at his kitchen table with a stack of papers I didn’t fully understand, trying to figure out which ones mattered and who to call first. The insurance company didn’t walk me through it. The funeral home had their own priorities. And every website I found was either written by an insurance company trying to reduce their support calls or a law firm trying to sign a new client.

This guide exists because the one I needed didn’t. It walks you through every step of filing a life insurance claim, from the moment you realize there’s a policy to the moment the death benefit reaches your account. But more than that, it covers what nobody tells you: what documents to have ready before you make the first call, what your rights are when the insurance company stalls or pushes back, what the tax implications actually look like, and what to do when the situation is complicated by trusts, contested beneficiaries, special needs dependents, or a policy you can’t even find.

If you’re reading this because you just lost someone, I’m sorry. Let’s make sure this part doesn’t have to be harder than it already is.

What You Need to Know Before You Make the First Call

Most people pick up the phone and call the insurance company within hours of a death. That instinct makes sense. You want to get the process moving because everything feels urgent. But calling before you understand a few things can actually slow you down and, in some situations, create complications that didn’t need to exist.

Before you dial that number, take a breath and spend 30 minutes getting oriented. That small investment of time will save you days of back-and-forth later.

Understand who has the right to file. The person who files a life insurance claim is almost always the named beneficiary on the policy. That is not necessarily the spouse, the oldest child, or the person managing the estate. Beneficiary designations on a life insurance policy override what’s written in a will. If the policy names one person and the will names another, the policy wins. This surprises families more often than you’d expect, and it’s one of the most common sources of life insurance mistakes that cost families everything.

Know the difference between policy owner, insured, and beneficiary. These three roles don’t have to be the same person, and they often aren’t. The owner controls the policy and pays the premiums. The insured is the person whose death triggers the payout. The beneficiary receives the money. If someone other than the deceased owned the policy, for example a spouse, a business partner, or a trust, that changes who contacts the insurance company and what documentation is required. If your family’s situation involved someone else owning a policy on the insured, this distinction becomes critical at claim time.

Find out what type of policy you’re dealing with. Term life, whole life, universal life, and group policies through an employer each have different rules, different timelines, and different payout structures. A group policy through work may require you to contact the employer’s HR department first rather than the insurance company directly. A whole life policy may have outstanding loans against the cash value that reduce the death benefit. You don’t need to become an expert, but knowing the policy type before your first call helps you ask the right questions and avoid being caught off guard.

Check whether the death occurred during the contestability period. Nearly every life insurance policy has a contestability window, typically the first two years after the policy was issued. During this period, the insurance company has the right to investigate the application for misrepresentations or omissions. If your loved one’s policy was less than two years old at the time of death, the claims process may take longer and involve more scrutiny. This does not mean your claim will be denied. It means you should be prepared for additional questions and requests for medical records, and you should know that the insurance company is legally required to give you a specific, written reason if they deny the claim.

Don’t post about the death on social media before you’ve reviewed the policy. This sounds unusual, but insurance investigators increasingly review public social media accounts during the contestability period. Posts about cause of death, lifestyle, health, or activities can be taken out of context and used to support a denial. Until the claim is processed, keep details private.

Documents to Gather Before You Contact the Insurance Company

There is a natural instinct to start making phone calls the moment you learn a life insurance policy exists. But every call goes faster and every conversation becomes more productive when you already have the right paperwork organized in front of you. Gathering documents first is the single most effective thing you can do to speed up the claims process.

You won’t need every item on this list for every situation. But having them collected in one place before your first call means you won’t be scrambling later while the insurance company’s claims department has you on hold.

The policy itself. This is the most important document. It contains the policy number, the insurer’s name, the face value of the death benefit, the named beneficiaries, and the policy type. If you have the original paper policy, set it aside in a folder. If you only have a digital copy or a declaration page, that works too. If you cannot find the policy at all, don’t panic. We’ll walk through exactly how to locate a missing policy in the step-by-step process below, including the NAIC Life Insurance Policy Locator, a free government tool most families don’t know exists.

Certified death certificates. You will need more than one. The insurance company will require a certified copy, not a photocopy, and if there are multiple policies, each insurer typically needs their own original. Most families should order at least six to ten certified copies from the vital records office in the state where the death occurred. They cost between $10 and $25 each depending on the state, and ordering extras upfront is far cheaper and faster than requesting additional copies later. Your funeral director can usually help you order these during the arrangement process.

The insured’s full legal information. This includes their full legal name, date of birth, Social Security number, date of death, and last known address. The insurance company will ask for all of this during the initial claim call, and having it written down prevents you from having to search through documents while you’re on the phone.

Your own identification. As the beneficiary filing the claim, you’ll need to verify your identity. Have your government-issued photo ID, Social Security number, and current address ready. If the beneficiary is a trust or an entity rather than an individual, you’ll need the trust documents or entity paperwork instead.

Cause of death documentation. For most natural deaths, the certified death certificate is sufficient. However, if the death was accidental, the result of a homicide, or occurred under circumstances the insurer may investigate, you may also want to have the medical examiner’s report, police report, or autopsy results available. Policies with accidental death riders will specifically require documentation that the death meets the policy’s definition of an accident.

Supplemental documents depending on your situation. If the policy was employer-sponsored, you may need employment verification or the group policy number from the employer’s HR department. If the beneficiary is a minor, you may need guardianship or custodial account documentation. If the beneficiary is a special needs trust, you’ll need the trust agreement. If you are the contingent beneficiary filing because the primary beneficiary is also deceased, you’ll need their death certificate as well.

Keep everything in one physical folder. A simple manila folder labeled with the insured’s name and the insurance company works. Every document you receive, every confirmation number you’re given, every name of every representative you speak with goes in that folder. When you’re grieving, your memory is unreliable. The folder becomes your memory.

Understanding Your Rights as a Beneficiary

Most beneficiaries don’t know they have rights during the claims process. Insurance companies are not required to volunteer that information, and most don’t. The result is that families accept delays, vague explanations, and even wrongful denials without realizing they have legal protections specifically designed to prevent exactly that.

You have the right to a timely decision. Every state has laws governing how quickly an insurance company must process a life insurance claim. While the exact timeline varies by state, most require the insurer to acknowledge receipt of your claim within a set number of days, request any additional documentation within a defined window, and pay or deny the claim within 30 to 60 days of receiving a complete submission. If the insurer misses these deadlines, they may owe you interest on the death benefit. The National Association of Insurance Commissioners maintains a complaint portal that connects you directly to your state’s insurance department if you believe your claim is being unreasonably delayed.

You have the right to a written explanation for any denial. An insurance company cannot simply tell you over the phone that your claim has been denied. They are legally required to provide a written denial letter that states the specific reason the claim was rejected and cites the policy provision they’re relying on. If you receive a verbal denial without a written explanation, request one immediately. That letter becomes the foundation of any appeal or legal challenge.

You have the right to appeal. A denial is not the end of the process. Every insurance company has an internal appeals process, and beyond that, your state’s department of insurance can review the denial independently. In cases involving bad faith, where an insurer unreasonably delays, underpays, or denies a valid claim, beneficiaries may also have the right to pursue legal action that includes damages beyond the policy’s face value. Affordable legal protection services make it possible to get attorney guidance without a traditional retainer. The Consumer Financial Protection Bureau offers guidance on managing financial matters after a death, including understanding your rights when dealing with financial institutions.

You have the right to choose your payout structure. Insurance companies sometimes default to their preferred payment method, which is often a retained asset account rather than a lump sum check. A retained asset account means the insurer holds your money in an interest-bearing account they control, issuing you a checkbook to draw against it. This is not the same as receiving your death benefit. The interest rate is typically lower than a basic savings account, and the funds may not be FDIC-insured because they’re held by an insurance company, not a bank. You have the right to request a full lump sum payment, and in most cases, the insurer is required to honor that request.

You have the right to information about the policy. As a named beneficiary, you are entitled to know the face value of the policy, the type of policy, whether any loans or liens exist against it, and the status of premium payments at the time of death. If the insurer tells you a policy has lapsed, ask for the premium payment history and the date of lapse. Policies with grace periods or automatic premium loan provisions may still be active even if a payment was missed.

State insurance departments exist to protect you, not the insurance company. If at any point during the claims process you feel that the insurer is acting in bad faith, stalling without justification, or refusing to provide information you’re entitled to, your state’s department of insurance will investigate on your behalf at no cost. You can locate your state’s department through the NAIC’s state insurance department map and file a complaint directly. These departments have regulatory authority over the insurers operating in your state, and complaints are taken seriously.

How to File a Life Insurance Claim: Step-by-Step

How to Fight a Life Insurance Claim Denial or Dispute

A denied life insurance claim feels like a door slamming shut. But in most cases, it’s the beginning of a process, not the end of one. Insurance companies count on the fact that most beneficiaries don’t know their rights, don’t understand the appeals process, and will accept a denial letter as a final answer. Understanding how to push back, and when to escalate, is the difference between walking away empty-handed and collecting the benefit your loved one intended you to have.

Start by understanding exactly why the claim was denied. The denial letter is your most important document. Every insurer is legally required to provide a written explanation that cites the specific policy provision they’re relying on and the factual basis for their decision. Read that letter carefully, more than once, and compare the cited provision against the actual policy language. Denials sometimes reference provisions that don’t say what the insurer claims they say, or they apply exclusions in ways the policy doesn’t support. If the letter is vague or doesn’t cite a specific provision, that itself may be a violation of your state’s insurance regulations.

Gather your evidence before you respond. Once you understand the denial reason, build your response around documentation that directly contradicts it. If the denial is based on an alleged misrepresentation on the application, obtain the original application and the insured’s medical records from the time of application. If it’s based on a lapsed policy, request the complete premium payment history and check whether the policy had a grace period or automatic premium loan provision that would have kept it active. If the denial involves an excluded cause of death, get the official death certificate, autopsy report, or medical examiner’s findings and compare the stated cause of death against the policy’s specific exclusion language. Every piece of evidence goes in your folder with a dated log of when you received it and from whom.

File your internal appeal with precision. Your appeal letter should be factual, organized, and directly responsive to every point in the denial letter. Do not write an emotional plea. Write a structured argument. Open with the claim number, policy number, and date of denial. State each reason the insurer gave for the denial, then address each one individually with your supporting documentation attached. If the insurer denied based on a pre-existing condition during the contestability period, attach medical records showing the condition was disclosed or that it was not material to the underwriting decision. If they claim the policy lapsed, attach bank statements showing premium payments or the policy’s grace period language. Send your appeal by certified mail with return receipt, or through the insurer’s secure upload portal with screenshots confirming submission.

Know the timeline your insurer must follow. After receiving your appeal, the insurance company is bound by state-specific deadlines to review and respond. Most states require a decision within 30 to 45 days. If the insurer misses this deadline or fails to acknowledge your appeal, that delay itself becomes grounds for a regulatory complaint. Document every deadline and every missed response.

Escalate to your state’s department of insurance when the internal process fails. If your appeal is denied or ignored, the next step is a formal complaint with the state department of insurance that regulates the insurer. This is not a symbolic gesture. State insurance departments have investigatory authority and can compel an insurer to re-examine a claim, produce internal documents, and justify their decision to a regulator. Your complaint should include a complete timeline, copies of all correspondence, the denial letter, your appeal, and any supporting evidence. Most states allow you to file online, and there is no cost.

Recognize when you’re dealing with bad faith. Insurance bad faith occurs when an insurer unreasonably denies, delays, or underpays a valid claim. Examples include denying a claim without conducting a reasonable investigation, misrepresenting policy provisions to justify a denial, failing to respond to communications within required timeframes, or offering a settlement far below the policy’s face value without justification. Bad faith laws vary significantly by state, but in many jurisdictions, a successful bad faith claim can result in the insurer paying the full death benefit plus additional damages, attorney fees, and in some cases punitive damages. If you suspect bad faith, document everything and consult an attorney who specializes in insurance disputes.

You don’t need a $500-per-hour attorney to fight back. Many beneficiaries assume that challenging a denial requires expensive legal representation they can’t afford while they’re already financially strained by a death in the family. That’s not always the case. Some insurance attorneys work on contingency, meaning they take a percentage of the recovered benefit and you pay nothing upfront. For families who need affordable access to legal guidance without committing to a retainer, membership-based legal services like LegalShield provide unlimited attorney consultations, document reviews, and letters written on your behalf starting at under $30 per month, with full representation available at reduced rates when your situation requires it. Having a licensed attorney review your denial letter and advise on your appeal can be the difference between a form-letter rejection and a six-figure payout.

Protect yourself from identity theft during the dispute. Extended claim disputes mean the deceased’s personal information remains active in more systems for longer. The FTC recommends placing a deceased alert on all three credit bureaus (Equifax, Experian, TransUnion) as soon as possible after a death. This prevents identity thieves from opening accounts or filing fraudulent claims using the deceased’s Social Security number, which becomes a higher risk the longer financial matters remain unresolved.

Don’t let the clock run out. Every state has a statute of limitations for filing a lawsuit against an insurance company, typically between one and six years from the date of denial depending on the state and the type of claim. The internal appeals process and regulatory complaint do not pause this clock. If your situation is heading toward litigation, get legal advice well before the deadline approaches. Missing the statute of limitations extinguishes your claim permanently, regardless of how strong your case is.

Tax Implications of a Life Insurance Death Benefit

One of the first questions beneficiaries ask after filing a claim is whether they’ll owe taxes on the payout. The short answer for most families is no. But the full answer depends on how the benefit is structured, how it’s paid out, and what happens to the money after it arrives.

The death benefit itself is generally not taxable income. According to the Internal Revenue Service, life insurance proceeds paid to a beneficiary because of the insured’s death are typically excluded from the beneficiary’s gross income. This applies regardless of whether the payout is $25,000 or $2.5 million. You do not need to report it as income on your federal tax return, and in most states, it’s excluded from state income tax as well.

Interest earned on the death benefit is taxable. If there is any delay between the date of death and the date you receive payment, the insurance company may owe you interest on the benefit amount for that period. That interest portion is taxable income and will be reported to the IRS. If you choose an installment payout or annuity option rather than a lump sum, each payment includes an interest component that is also subject to income tax. The insurer will typically send you a 1099-INT for any interest paid during the tax year.

Estate tax is a separate question from income tax. While the death benefit isn’t income to the beneficiary, it can be counted as part of the deceased’s taxable estate for federal estate tax purposes. This only affects estates that exceed the federal estate tax exemption threshold, which for 2025 is $13.61 million per individual. The vast majority of families will never encounter this issue. However, if your loved one’s total estate, including life insurance proceeds, real estate, investments, and other assets, approaches or exceeds that threshold, the policy proceeds could be subject to estate tax. This is one of the primary reasons financial planners recommend holding life insurance policies inside an irrevocable life insurance trust (ILIT), which removes the policy from the taxable estate entirely.

The transfer-for-value rule can create unexpected tax liability. If a life insurance policy was sold or transferred to another person for something of value before the insured’s death, the death benefit may become partially taxable to the new owner. There are exceptions for transfers to the insured, a partner of the insured, a partnership in which the insured is a partner, or a corporation in which the insured is a shareholder or officer. But if the policy changed hands through a life settlement or an informal sale, the tax treatment changes significantly. This is uncommon in most family situations, but if your loved one’s policy was purchased or transferred rather than originally owned, consult a tax professional before filing.

If you’re unsure, don’t guess. Tax rules around life insurance are generally favorable for beneficiaries, but the exceptions matter. If the policy involves an estate near the tax threshold, a transfer of ownership, an employer-owned policy, or a payout structure that includes interest, a one-time consultation with a tax professional or estate attorney is worth the cost. Most will review your specific situation for a flat fee, and the clarity you get back can prevent expensive mistakes.

When the Situation Is More Complicated Than a Standard Claim

The seven-step process above covers the vast majority of life insurance claims. But families don’t always fit neatly into standard categories, and the claims process gets more complex when the beneficiary is a trust, a minor, a person with disabilities, or when multiple people believe they’re entitled to the death benefit.

When the beneficiary is a trust. If your loved one named a trust as the beneficiary rather than an individual, the trustee files the claim, not the trust’s beneficiaries. The insurance company will require a copy of the trust agreement, identification of the trustee, and documentation of the trustee’s authority to act on behalf of the trust. Proceeds paid to a trust are still generally income-tax-free, but how the trustee distributes those funds and when can have tax implications for the trust’s beneficiaries. If the trust is irrevocable, the proceeds are also excluded from the deceased’s taxable estate, which is the primary reason estate planners recommend this structure for larger policies.

When the beneficiary is a minor. Insurance companies will not pay a death benefit directly to a minor child. If a minor is named as the beneficiary, the insurer typically requires a court-appointed guardian or custodian before releasing funds. This process involves petitioning the probate court, which takes time and costs money. In some states, if the benefit amount is below a certain threshold, a simplified process may be available through the Uniform Transfers to Minors Act (UTMA). This is one of the most preventable complications in life insurance planning, and it’s why financial advisors recommend naming a custodial account or a trust as the beneficiary rather than the child directly. If you’re navigating this situation now, an estate attorney in your state can guide you through the fastest path to accessing the funds for the child’s benefit.

When the beneficiary has special needs. Filing a life insurance claim on behalf of a beneficiary who receives government benefits like Supplemental Security Income (SSI) or Medicaid requires extreme care. A direct payout to the individual can disqualify them from those programs, sometimes permanently. If the policy names a special needs trust as the beneficiary, the trustee files the claim and the proceeds are held in trust without affecting eligibility. If the policy names the individual directly rather than their trust, contact a special needs attorney immediately before filing the claim. There may be options to redirect the funds into a trust after the fact, but the window to act is narrow and the rules vary by state.

When the beneficiary designation is contested. Beneficiary disputes happen more often than most families expect, particularly in blended families, after divorces, or when a policyholder forgot to update their designation after a major life event. The insurance company does not decide who gets the money when there’s a dispute. Instead, they file what’s called an interpleader action, which means they deposit the death benefit with the court and let the parties resolve the dispute through the legal system. If you believe you’re the rightful beneficiary but someone else is challenging the designation, document your relationship, gather any evidence of the policyholder’s intent, and consult an attorney. These cases hinge on state law and the specific language of the beneficiary designation form. The life insurance mistakes that cost families the most almost always involve outdated or unclear beneficiary designations.

When the policy was issued within the contestability period. If the insured passed away within the first two years of the policy being issued, expect the insurer to conduct a thorough investigation of the original application. They’re looking for material misrepresentations, which means significant inaccuracies about health, lifestyle, or medical history that would have affected the insurer’s decision to issue the policy or the premium they charged. Minor errors, like listing the wrong doctor’s address, are not grounds for denial. But undisclosed pre-existing conditions during the application process are the leading reason claims are denied during this window. If you’re facing a contestability investigation, gather the insured’s medical records proactively and consult an attorney before responding to the insurer’s requests. LegalShield members can have an attorney review the insurer’s requests and advise on your response for a flat monthly fee.

When you can’t find a policy but believe one exists. If your loved one mentioned having life insurance but you can’t locate any documentation, don’t assume the policy doesn’t exist. Beyond the NAIC Policy Locator and state unclaimed property databases mentioned in the step-by-step process, check with any employers your loved one worked for in the past 10 to 15 years. Group life insurance policies through former employers sometimes continue as converted individual policies even after employment ends. Also check with any fraternal organizations, unions, credit unions, or membership groups your loved one belonged to, as many offer small group policies to members. For families who need guaranteed coverage options without medical exams, particularly for older parents or those with health conditions, providers like Gerber Life offer guaranteed issue policies that can prevent this exact situation from happening to the next generation.

How to Prepare Your Family Now So They Never Have to Search for Answers

Everything in this guide exists because someone didn’t have a plan, or had a plan their family didn’t know about. The claims process itself is straightforward when the right pieces are in place. What makes it painful is the searching, the guessing, the discovering at the worst possible moment that a policy lapsed, a beneficiary was never updated, or nobody in the family knew the coverage existed at all.

If you’re reading this not because you just lost someone but because you want to make sure your family never faces what this guide describes unprepared, the steps below will take you less than a weekend and will change everything for the people you leave behind.

Tell your beneficiaries they’re named on a policy. This sounds obvious, but it is the single most impactful thing you can do. The NAIC estimates that a significant portion of unclaimed life insurance benefits go unpaid simply because the beneficiary never knew the policy existed. You don’t need to share the face value or the policy details. Just tell them the insurance company’s name, that they’re named as a beneficiary, and where the policy documents are stored. That conversation takes five minutes and is worth more than any amount of financial planning.

Review and update your beneficiary designations. Life changes. Marriages, divorces, births, deaths, and estrangements all affect who should receive your death benefit, and the designation on your policy doesn’t update itself. If you haven’t reviewed your beneficiary designations in the past two years, do it now. Check every policy you own, including group coverage through your employer, and make sure the primary and contingent beneficiaries still reflect your wishes. This is where the most expensive life insurance mistakes happen, and they’re the easiest to prevent.

Create a policy information sheet your family can find. A single page with the insurance company name, policy number, type of policy, face value, your agent’s contact information, and the location of the physical policy document. Store it with your will, your estate planning documents, or wherever your family knows to look. Give a copy to your executor or the person most likely to handle your affairs. If you’ve built an estate plan through a service like Ethos, your documents may already be organized digitally, but a physical backup ensures your family has access even if passwords or logins are unavailable.

Make sure your coverage actually matches your family’s needs. A policy you purchased ten years ago may no longer reflect your financial situation. If your income has grown, if you’ve had more children, if you’ve taken on a mortgage, or if your spouse has left the workforce, your coverage amount may be inadequate. If your family includes a dependent with special needs who relies on government benefits, your policy’s beneficiary structure needs to account for that. If you’ve developed health conditions since your original policy was issued, you may want to explore how current underwriting handles pre-existing conditions before assuming you can’t get additional coverage.

Consider whether your ownership structure protects your family. If your estate is large enough that the federal estate tax exemption could be a factor, or if you want to ensure the death benefit stays outside of probate, owning the policy through an irrevocable life insurance trust may be the right move. If someone else owns a policy on your life, make sure your family understands how insurable interest and ownership affect who can file the claim when the time comes. These structural decisions are invisible until they matter, and by then it’s too late to change them.

Don’t assume one policy is enough. Many families benefit from layering coverage: a term policy for the high-earning years when the mortgage is active and children are dependent, combined with a smaller permanent policy that lasts a lifetime and covers final expenses. Comparing what’s available takes minutes and gives you a clear picture of where the gaps are.

Have the conversation nobody wants to have. Sit down with your spouse, your adult children, your executor, or whoever will be responsible for your affairs. Walk them through what exists, where to find it, and who to call. Show them this guide if it helps. The families who navigate life insurance claims with the least amount of stress are not the ones with the most money or the best policies. They’re the ones who talked about it before it mattered.

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Frequently Asked Questions About Filing a Life Insurance Claim (FAQ)

How long does it take to receive a life insurance payout after filing a claim?

Most life insurance claims are processed within 30 to 60 days after the insurance company receives a complete submission. Some straightforward claims with no complications are paid in as little as two weeks. Delays typically occur when the claim requires additional documentation, the death occurred during the contestability period, or the beneficiary designation is being disputed. If your insurer has not acknowledged your claim within 15 days of submission, contact the claims department directly and reference your claim number.

What documents do I need to file a life insurance claim?

At minimum, you’ll need the life insurance policy or policy number, a certified death certificate (not a photocopy), the beneficiary’s government-issued identification, and the insured’s full legal name, date of birth, Social Security number, and date of death. Depending on your situation, you may also need trust documents, guardianship paperwork, medical examiner reports, or employment verification for group policies. Order at least six to ten certified death certificates early in the process since each institution typically requires its own original.

Can a life insurance claim be denied after it’s been approved?

Once a life insurance claim has been formally paid and the death benefit has been disbursed, it is extremely rare for an insurer to reverse that decision. However, if the insurer discovers fraud after payment, they may pursue legal action to recover the funds. Before formal payment, an insurer can change a preliminary approval to a denial if new information surfaces during the investigation. Always wait until the funds are fully deposited and cleared before making financial commitments based on the expected payout.

Is a life insurance payout taxable?

For most beneficiaries, life insurance death benefits received as a lump sum are not subject to federal income tax. However, any interest earned on the death benefit between the date of death and the date of payment is taxable. If you choose an installment or annuity payout, the interest component of each payment is also taxable. Life insurance proceeds may also be subject to federal estate tax if the deceased’s total estate exceeds the exemption threshold, which is $13.61 million per individual for 2025. Most families will not encounter estate tax issues, but beneficiaries receiving large payouts should consult a tax professional.

What happens if I can’t find the life insurance policy?

Start by searching bank and credit card statements for recurring premium payments, checking filing cabinets and safe deposit boxes, and contacting the deceased’s current and former employers about group coverage. If those steps don’t produce results, submit a free request through the NAIC Life Insurance Policy Locator, which searches participating insurance companies’ records and responds within approximately 90 days. You can also check your state’s unclaimed property database through USA.gov for policies that may have lost contact with the owner.

What should I do if my life insurance claim is denied?

Request the written denial letter if you haven’t received one, then compare the stated reason against the actual policy language. File an internal appeal that directly addresses each point in the denial with supporting documentation. If the internal appeal fails, file a formal complaint with your state’s department of insurance at no cost. For complex disputes or suspected bad faith, consult an attorney who specializes in insurance claims. Affordable legal services (aff) like LegalShield offer unlimited attorney consultations and document reviews starting at under $30 per month for families who need guidance without a traditional retainer.

Can a beneficiary be changed after the policyholder passes away?

No. Once the insured has passed away, the beneficiary designation on the policy at the time of death is final and legally binding. The designation cannot be changed by family members, the executor of the estate, or the insurance company. This is why keeping beneficiary designations current is one of the most important steps in life insurance planning. If multiple parties believe they are the rightful beneficiary, the insurance company will typically file an interpleader action and let the courts decide.

How do I file a life insurance claim if the beneficiary is a minor?

Insurance companies will not pay a death benefit directly to a minor child. You will need to petition the probate court for a court-appointed guardian or custodian, or establish a custodial account under the Uniform Transfers to Minors Act (UTMA) if your state allows it and the benefit amount qualifies. Some states have simplified processes for smaller benefit amounts. An estate attorney in your state can advise on the fastest path to accessing the funds for the child’s benefit. To prevent this situation, financial advisors recommend naming a trust or custodial account as the beneficiary rather than the minor child directly.

Does life insurance pay out for suicide?

Most life insurance policies include a suicide exclusion that applies during the first two years of the policy, which coincides with the contestability period. If the insured dies by suicide within that window, the insurer will typically deny the death benefit claim and refund the premiums paid. After the two-year period has passed, most policies cover death by suicide the same as any other cause of death. The specific exclusion language varies by policy and by state, so review the policy carefully or consult an attorney if this applies to your situation.

Can I file a life insurance claim if I’m not the named beneficiary?

Generally, only the named beneficiary or their legal representative can file a life insurance claim. If the named beneficiary has also passed away and no contingent beneficiary was designated, the death benefit typically becomes part of the insured’s estate and is distributed according to the will or state intestacy laws. If you believe you should be the beneficiary but are not currently named on the policy, consult an attorney about your options. In some cases, such as divorce decrees that required a former spouse to maintain coverage for children, courts may order the benefit redirected regardless of the current designation.

Author: Gabriel Killian

Founder, Memorial Merits U.S. Navy Service Member Gabriel created Memorial Merits after experiencing funeral industry complexities & exploitation firsthand when his father passed away unexpectedly in 2019. His mission: protect families from predatory practices and provide clear guidance during impossible times. [Read Full Story →] EXPERTISE: • Personal experience with loss • Funeral planning (multiple times) • AI grief support development • Published author (legacy planning)