What Your Beneficiaries Should Know Before You Pass

Hard weeks get easier when money moves fast and directions are clear. I’m a licensed life insurance agent, and this is the guide I give to families so a claim pays out quickly, without confusion or avoidable delays. Share it with the person who will handle things for you. Save it with your policy. It’s written in plain English and built for real life.

The big picture (how claims usually work)

Life insurance pays the person or trust named on the beneficiary form. The carrier needs three things to start: a claim form, a certified death certificate, and ID for the beneficiary. Clean paperwork plus a straightforward cause of death often means money hits the account in days to a couple of weeks, depending on the carrier’s cycle.

Your will does not control a life insurance claim. The beneficiary form does.

The one-page “break-glass” sheet

Create a single page and keep it with your policy PDF:

• Carrier name and phone
• Policy number
• Owner and insured names and dates of birth
• Beneficiaries (primary and contingent) with percentages that total 100
• Your agent’s name and contact
• Draft date and grace period
• Where to find the policy PDF and any trust or assignment papers
• For whole life: loan balance and loan rate
• For UL/IUL/GUL: date of the last in-force illustration

Tell your family where this page lives. Text a photo of it to your spouse or trusted person.

Beneficiary setup that prevents delays

• Primary and contingent beneficiaries, full legal names, and percentages totaling 100
• For minors, do not list children directly. Use a UTMA/UGMA custodian or a trust so the carrier can pay without court involvement
• If you want a child’s share to flow to their kids if that child has passed, mark per stirpes
• After divorce, update the form; some states honor old designations, others don’t
• If a bank ever held a collateral assignment, file the release when the loan is paid

Send any changes on the carrier’s form, not by email note alone.

What to gather now (so your beneficiary isn’t hunting later)

• Photo ID for each beneficiary
• Social Security numbers and contact info
• Your doctor’s name and clinic
• Funeral home you prefer (or pre-need details)
• List of your active policies: individual term, whole life, UL/IUL/VUL/GUL, any group coverage at work, and accidental death (AD&D) if you have it
• A short list of accounts to settle: mortgage servicer, car lender, utilities, and any subscription autopays tied to your bank

What your beneficiary files on day one

1. Carrier claim form (I’ll send the right one)
2. Certified death certificate (ask the funeral home for 6–10 copies; you’ll use them for more than insurance)
3. Government ID for the beneficiary
4. Policy number and, if handy, the policy face page
5. Any assignment release (if you ever pledged the policy to a lender)
6. Direct deposit form for the beneficiary’s bank account

Pro tip: many funeral homes transmit the first packet for you. Ask.

Why claims get delayed (and how to avoid that)

1. Contestability review (first two years after policy start, and the first two years after a reinstatement): carriers can check medical records to verify the application.
   • Avoidance: be candid on the application; keep policies in force so you don’t reset clock pieces through reinstatement.
2. Beneficiary problems: no contingent, minor listed directly, ex-spouse still on file, “estate” named by default.
   • Avoidance: fix the beneficiary form now; use custodian or trust for minors; mark per stirpes if you want that flow-down.
3. Missing documents: wrong names, no ID, policy number unknown.
   • Avoidance: use the break-glass sheet and keep IDs ready.
4. Cause-of-death flags: homicide, accidents under investigation, or deaths during the suicide clause period (usually two years).
   • Avoidance: you can’t control investigations, but you can submit the medical examiner report and police file number with the claim to cut back-and-forth.
5. Loans and math inside the policy: whole life and UL/IUL/VUL claims with large loans take extra reconciliation.
   • Avoidance: keep loans modest; turn on overloan protection if available; review yearly.

How the payout can be received (pick what fits)

• Lump sum: most common.
• Retained asset account: carrier holds funds in an interest-bearing account; beneficiary writes checks or transfers.
• Installments or annuity: spreads income; can help with budgeting.
• Interest-only for a time: principal stays in the account, interest is paid out until the beneficiary decides.

Your beneficiary can ask for written options before choosing. There’s no prize for deciding on the spot.

Taxes in a nutshell

• Life insurance death benefits are generally income tax free to individuals.
• Interest earned after the carrier holds funds can be taxable.
• Loans on a policy that lapsed shortly before death can create wrinkles.
• Very large estates and certain ownership setups can raise estate or gift topics.

When in doubt, your beneficiary can ask a tax pro. Keep the carrier’s payout letter for records.

Special situations your family should be ready for

Group life through work

• Often ends when employment ends. Your personal policy follows you; group is a layer, not your full plan.
• If you leave a job, ask about conversion within their window.

Business-owned or collateral assignments

• Keep buy-sell agreements and assignment releases handy. The carrier will ask.

Trusts

• Carriers only need the pages that show the trust name, date, and who can sign. Keep a short extract ready.

Community-property or equitable-distribution issues

• Some states give spouses rights to certain assets. Your beneficiary still files the claim, but keep marital documents tidy and speak with counsel if you expect a challenge.

Special-needs planning

• A direct payout to a person on means-tested benefits can affect eligibility. Consider a special needs trust and keep that paperwork with the policy.

International travel or residency

• Long trips or living abroad can complicate document retrieval. Store scanned IDs and policy pages in a secure cloud folder your beneficiary can access.

What your beneficiary does in the first 48 hours

1. Tell the agent: “We need to open a claim on policy #[number]. Please send the claim form and list of required documents.”
2. Ask the funeral home for certified death certificates (tell them how many you need).
3. Gather ID and bank info for the beneficiary.
4. If an investigation exists, write down the case number and department contact.
5. If multiple policies exist, file claims with every carrier on the same day.

What not to do

• Don’t wait on a will reading for insurance proceeds. File the claim right away.
• Don’t change banks until the benefit lands; direct deposit needs a live account.
• Don’t guess on forms. If a line is unclear, ask me or the carrier.
• Don’t send originals of your only death certificate unless requested; carriers accept certified copies.

If a payment was missed recently

Policies have a grace period (often 31 days). During grace, coverage is still active, and a claim pays minus the overdue premium. After a lapse, coverage stops until reinstated.

If a lapse might have occurred, your beneficiary should call the carrier and ask:

• “Was the policy in grace or lapsed on [date]?”
• “If lapsed, what’s needed for reinstatement?”

If reinstatement happened in the last two years, expect a contestability review of reinstatement statements.

AD&D and other add-ons

Accidental death riders and AD&D policies pay only for qualifying accidents. Illness is not covered. If you have one, your beneficiary should file both the base life claim and the accidental rider claim with the accident report attached.

How I help your beneficiary at claim time

• Open the claim the same day and send the exact forms already annotated
• Coordinate with the funeral home on certificates
• Provide a short cover letter to the carrier with policy number, contact info, and any case numbers attached
• Track the file weekly and ask for updates in writing
• Troubleshoot beneficiary or ownership snags (ex-spouse listed, minor child, assignment still on file)
• Explain payout options in plain English before your beneficiary chooses

Tell your family to use me like a concierge during a hard week.

A simple yearly checkup that keeps things smooth

• Confirm owner and both beneficiary levels
• Add or adjust a custodian/trust if kids are still minors
• For term: write down the conversion deadline and eligible permanent menu; set a reminder two years before the deadline
• For whole life: note loan status and rate; decide if loan payments or partial paydowns make sense
• For UL/IUL/GUL: request an in-force illustration and verify guarantees are still on track
• Save a fresh copy of the break-glass sheet and send it to the person who will file the claim

Fifteen minutes once a year saves weeks later.

Quick scripts your beneficiary can copy/paste

To the carrier (opening a claim)
“Hello, I’m the beneficiary for policy #[number] on [Insured Name, DOB]. Please email the claim form and a list of documents you need. I’ll submit a certified death certificate and my ID. Here is my contact and preferred payout method: [phone/email/bank info for direct deposit].”

To a bank that once held an assignment
“Please confirm in writing that the collateral assignment on policy #[number] has been released. If not, send the release form so we can complete the life insurance claim.”

To the medical examiner/police (if applicable)
“We’re filing a life insurance claim and need the case number and report access steps for [Name, Date]. Please provide the process and contact person.”

Mini stories that show how prep helps

Minor listed directly
A parent named a 12-year-old as primary. Claim paused for the court to appoint a guardian. A simple UTMA custodian designation would have allowed an immediate payout.

Old bank assignment
A small business paid off a loan years ago, but the assignment was never released. The carrier waited for the bank’s letter. One release on file during life would have cut weeks.

Loan that crept up
Whole life with a growing loan. We turned on overloan protection and paid the balance down before it snowballed. The claim later paid the net amount without drama.

Hand this to your family

1. The break-glass sheet
2. The policy PDF(s)
3. This article (printed or saved)
4. My contact card

Tell them: “Call my agent and the carrier the same day. Send the claim form, a certified death certificate, and your ID. Choose payout after you see the written options.”

I’ll take it from there.