How a burial insurance claim is paid

What to do first

Call the carrier. The claims number is on the policy document, on any premium notice and on the carrier website. You do not need any paperwork ready to make that first call. Tell them the name of the insured, the date of death and the policy number if you have it, and ask them to send the claim form.

Tell the funeral director at the same time that a policy exists and name the carrier. Funeral homes deal with this constantly and many will hold the account, or accept an assignment of part of the benefit, rather than asking the family to pay up front. That single conversation removes most of the financial pressure from the week.

There is no deadline to worry about. A life insurance benefit does not expire and there is no time limit on filing, so a claim discovered years later is still payable. Filing promptly simply means the money arrives when it is needed.

The documents you need

• The claim form. Sometimes called a statement of claim or a claimant statement. One per beneficiary.
• A certified death certificate. An original certified copy with a raised or coloured seal, not a photocopy and not the funeral home worksheet.
• Proof of your identity. A driver licence or passport, and often your social security number for tax reporting.
• The policy number. Helpful but not essential, since carriers can search by name and date of birth.
• Bank details if you want the money paid electronically rather than by cheque.
• An assignment form if part of the benefit is going straight to the funeral home.

Occasionally more is asked for. If the beneficiary has died, the carrier needs their death certificate as well. If the claim is filed by an executor or a trustee, the carrier needs the document appointing them. If the policy was owned by someone other than the insured, that owner may need to sign as well.

Certified death certificates

The certified death certificate is the document everything else waits on. The funeral director normally orders them on the family behalf as part of arranging the funeral, and they come from the vital records office in the state or county where the death occurred. Expect a modest fee per copy, with additional copies usually cheaper than the first.

Order more than you expect to need. Life insurance, banks, pension providers, the motor vehicle authority, brokerage accounts and the deed to a property may each want their own certified copy, and returning later for more costs another fee and another wait. Ten copies is not excessive for an estate with several accounts. Two or three is the minimum for a single insurance claim.

Also check what the carrier will accept. Many will now work from a clear scan or an emailed copy to begin processing, and ask for the certified original only before payment. Asking that question on the first call can save several days.

A realistic timeline

Typical timescales for a small simplified issue policy with one named beneficiary. Individual carriers work at different speeds, and state law sets its own limits on how long a carrier may take to settle once it has everything it needs.

The rate limiting step is almost never the insurance company. It is the certified death certificate, which cannot be issued until the death has been registered. That is why the practical advice is to chase the funeral director on the certificates rather than the carrier on the claim.

Why these policies pay in days

A burial insurance claim settles far faster than a large life insurance claim, for four structural reasons rather than because anyone is doing you a favour.

• The face amount is small. A $10,000 claim does not receive the level of review a $1,000,000 claim attracts.
• There are no medical records to order. The policy was underwritten from questions and databases, so there is no file to reassemble.
• The beneficiary is usually a single named person. One form, one identity to verify, one payment to make.
• Carriers compete on it. Fast settlement is one of the few things that distinguishes these products, and the industry knows it.

That speed is exactly why the product suits a funeral. The median funeral home bill for a burial with a viewing is $8,300, and funeral homes generally expect payment at or before the service. A larger life insurance policy usually covers the cost but not the timing, which is the problem burial insurance was designed around.

What slows a claim down

Most of that list is decided years before the claim, on the application form. Naming a beneficiary properly removes four of the seven rows on its own.

The contestability period

Every life insurance policy carries a contestability period, normally the first two years from issue. If a death occurs within it, the carrier has the right to review the original application against your records before paying. It is not an accusation and it is not unusual. It is a standard provision, required in some form by state law, and it exists to stop somebody applying while already knowing they are seriously ill.

In practice a contestable claim takes longer, commonly a few weeks rather than a few days, because the carrier orders a prescription history report and sometimes medical records. If the application was answered honestly, the claim is paid in full. If a material misstatement is found, one that would have changed the underwriting decision, the carrier can deny the claim and return the premiums instead.

After two years the policy is incontestable, and the carrier can no longer challenge it on the basis of the application. Suicide is treated separately, with its own exclusion period, also commonly two years. None of this is affected by whether an exam was taken, which is why no exam does not mean no verification.

Note that a contestability review is a different thing from a graded or guaranteed issue waiting period. A waiting period limits how much is payable and is written into the contract from the start. Graded benefit policies explains that distinction, which trips up a great many families.

If a claim is denied

• Ask for the denial in writing, with the specific policy provision relied on and the information used.
• Request the underlying records, including the prescription history report, and check them for errors. You have a right to dispute inaccurate consumer report information.
• Send a written appeal to the carrier with anything that corrects the record, such as a letter from the treating physician.
• File a complaint with the state insurance department if the answer is unsatisfactory. Every state runs a free consumer complaint process and carriers take it seriously.
• Check whether your state requires interest to be paid on a delayed claim, since many do.
• Speak to an attorney if the amount justifies it, though on a policy of this size the state complaint route usually resolves matters first.

If you cannot find the policy

Missing policies are a real problem. If you believe cover existed but cannot find the paperwork, look through bank statements for a recurring premium payment, check post from insurers, and ask the funeral director whether the family ever mentioned a carrier. Then use the NAIC Life Insurance Policy Locator, a free service that asks participating carriers to search their records and contact the beneficiary directly.

Also search your state unclaimed property records. When a carrier cannot find a beneficiary it eventually turns the money over to the state, where it sits until somebody claims it. Both searches are free and neither requires a lawyer.