Subscribing to a life insurance policy is a way to provide your close ones with financial security in the event of your passing, and to help unburden them of the financial difficulties they might face. However, when someone passes, the beneficiaries must claim the pay out with the insurance company.
No matter if you want to protect your family or if you have just recently lost a loved one, Crématel explains how life insurance works in the event of someone’s passing.
What Happens when Someone Dies?
When a loved one passes, the life insurance policy comes into effect to provide the beneficiaries with financial support. You will have to contact the insurance company to claim the pay out.
The Life Insurance Claim Process
1. Death Notice
The first step is to inform the life insurance company of the deceased’s passing so that the claim process can begin. This can be completed by members of the family, the beneficiaries or a representative.
2. Gathering the Necessary Documents
Once you have informed the insurance company of the death, they will send the beneficiary, the estate representative or liquidator, a claim kit that explains the different steps that need to be followed. The necessary documents will have to be compiled, including the death certificate and proof of identification, among other things and according to their instructions.
3. Submitting the Claim Request
To submit the claim request, you will then have to fill out the claim form: this will include different information regarding the insured, the beneficiary and the insurance contract.
4. Evaluating the Claim
Once the claim has been received by the insurance company, they will evaluate the provided information and verify the validity of the claim. They will then inform you of their decision: the claim can be accepted, denied or differed.
5. Verifying the Benefeciaries
The insurance company will verify the identity of the life insurance policy’s beneficiaries. The policy could mention that the life insurance is payable to the estate (which could also be referred to by a different name like “the heirs” or “the liquidators”). According to the new law concerning life insurance and the inheritance, life insurance is excluded from the inheritance if the insured had a designated beneficiary.
6. Treating the Claim
Once the claim has been approved, the insurance company will proceed to treating the claim. The exact amount will be calculated according to different factors such as the type of insurance, the amount of the insurance, the balance at the time of death, etc.
7. Benefits
Finally, the insurance company will pay the beneficiaries the compensation, as stated in the contract.
How long does it take to receive the life insurance pay out after a loved one has passed?
In the even of a death, receiving the life insurance compensation can take from a few days to a few weeks. Once the necessary documents have been received, the insurance company has 30 days to pay the claim. In the event that one of the conditions has not been respected and the insurance company has to proceed to an investigation, it can take even longer before receiving the pay out. This is also the case when the life insurance policy is part of the inheritance.
How can you know if your loved one had a life insurance contract?
You cannot find a life insurance contract? Have you looked in every file and gone through all of your loved one’s documents and come up empty? How can you find out if they had a life insurance contract? No matter if the deceased had mentioned it or not, there are different ways to retrace a life insurance contract.
There are Several Different Resources to Help you Find Information
Firstly, the deceased might have mentioned a life insurance contract in their will. But what can you do if there is no will? Find out more about finding a will. You might find the life insurance policy by:
- Checking their bank accounts and communicating with their financial institution;
- Contacting the credit card issuers;
- Calling your deceased loved one’s employer’s or previous employer’s human resources;
- Researching the different associations your loved one might have been a part of, like syndicates, professional or retiree associations;
- Contacting your loved one’s financial planner or advisor, if they had one.
Different Types of Insurance
Apart from a regular life insurance policy, some contracts or insurance policies could also give you access to a compensation. The policy holder could, for example, have a travel insurance, a critical illness insurance plan, an accident insurance plan or any other type of contract.
The Register of Unclaimed Property
After completing all of this research, you still might come up empty… Don’t despair, the money isn’t lost. Once the insurance company has been informed of the deceased’s passing, or once this person has reached a certain age, they will generally try to contact the beneficiaries themselves. And if they cannot find them, the pay out will be sent to Revenu Québec, at which time you will be able to claim it with the Register of Unclaimed Property. You can check a few times after your loved one’s passing, then once a year after that.
Call Upon the OLHI
If you research has led you nowhere, but you know that your loved one had a life insurance policy, there is a free public service that you can access: the OmbudService for Life and Health Insurance (OLHI). The OLHI will search for the life insurance policy for you, by contacting the member companies, which represent 99 % of the life insurance policies in Canada.
FAQ about life insurance contracts in the event of a death:
Is it possible that the life insurance contract is refused?
Yes, if some of the conditions have not been respected or in the event of a false statement, like regarding age or health conditions, for example. What can you do if your life insurance plan has been refused? Begin by making a complaint through the insurer’s internal process. If that does not yield the desired result, you can address the OLHI directly.
Is the life insurance part of the inheritance?
When there are beneficiaries indicated in the contract, the insurance policy is treated separately from the inheritance. If no one has been specified directly in the life insurance contract, the beneficiaries are those stated in the will. Take note that if there is a life insurance contract but that the inheritance has been renounced, it might still sometimes be possible to receive the amount stated in the contract.
What happens if the beneficiary dies first?
Unless a second beneficiary has been named, the life insurance pay out will be granted to the estate.
The administrative procedures can sometimes be complicated and difficult to manage. Although they are quite unpleasant, especially in already difficult times, they are necessary. We recommend you ask a loved one for help, or a professional if needed.
You can also take the burden of these administrative procedures away from your loved ones by choosing funeral prearrangements. At Crématel, in Saint-Jérôme, we guide you every step of the way, as we will guide your loved ones once you are gone. Contact us to find out more.
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