Also, remember that if the policy has a waiting period, there is no payout for death during that time. You’d only get a refund of your premiums.
In this article, you’ll learn precisely how long it takes for a senior burial policy to pay and what issues might cause a delay.
By design, burial insurance plans (aka final expense insurance or funeral insurance) are meant to pay quickly because A) they are typically meant to pay for a funeral which is a very time-sensitive issue, and B) the coverage amounts are so small.
However, it’s not as simple as you buy a policy on Monday, and if you die Tuesday, your family gets a check within 24-48 hours. While there are unscrupulous companies such as Lincoln Heritage that will give you that impression, trust that they are not being truthful in their messaging.
Regardless of which burial insurance company issues the policy, you must understand that a claim must be approved before any insurance company will cut a check.
The obvious question is, what does it take to approve a claim?
99.9% of the time, what it takes to approve a death claim depends on how long the policy was active when the insured died. Also, some very rare circumstances could cause a claim delay, such as fraud or if a beneficiary murders the insured.
We’ll discuss, in detail, all the things you need to know about these circumstances below.
First, if a policy has a waiting period, there is no chance of a death benefit being paid out in the first two years. Many plans have waiting periods, such as guaranteed acceptance policies with no health questions. Any nonaccidental death during a waiting period type of plan will cause the insurer to refund your money plus roughly 10% interest.
Alternatively, there are no waiting period final expense policies that fully cover you 100% the day you make your first payment for natural or accidental death. Additionally, some plans have partial coverage during the first two years. Typically, they will pay 30%-40% of the policy’s face amount during the first year and 50%-75% during the second year.
Here’s the indisputable truth that cannot be avoided. Any agent or company that claims otherwise is trying to scam you.
If you have a final expense policy with full or partial coverage and you die in the first two years, the insurance company will order your medical records before they pay your claim. The right of the insurer to investigate the claim in the first two years is called the contestability clause, which is present in all life insurance policies (no exceptions).
Essentially, they will review your medical history to ensure you were truthful when you originally applied. Remember, the requirements for a burial policy don’t entail getting your medical records upfront. They rely on your truthful answers to determine your eligibility.
If they find you were honest, they will pay your claim in full (even if you died the day the policy started). However, let’s say they found documented evidence of a health issue(s) present when you applied (not after the policy issue) that would have caused them to deny you coverage. In that case, they will not pay your claim. They would only refund your money.
So for deaths in the first two years, it could take many weeks or months as it pertains to how long it takes to pay out a burial insurance claim. It takes time for the insurance company to get your medical records from various physicians and review them to determine if you were honest when you answered the health questions.
Whether you had a policy with or without a waiting period, claims that occur after 24 months are paid very quickly. It’s typically only 24-72 hours once they have the necessary documentation, such as a death certificate or confirmation from a funeral home with the body.
Also, remember that funeral homes will almost always immediately execute the funeral services when they see you have a life insurance policy that is older than two years. They know the claim will 100% be paid soon, which is why they’re okay with performing the services right away. Most of the time, they’ll do an assignment which means that you have the insurance company send the funeral home the money they’re due, and you get anything left over.
Albeit rare, some special cases will delay the payment of a burial policy irrespective of how long it has been in force.
- Fraud: The insurance company must have compelling evidence that the policy was issued under fraudulent terms. Someone would have had to forge signatures on the application or provide false documentation to get the policy approved. In addition, the insurance company would need clear-cut evidence of said fraud to open up an investigation. Without proof, an insurer would likely never know of the fraud committed against them, and there’s not much they can do about it without evidence. But if there is proof of fraud, the claim payout would be delayed indefinitely until they complete their investigation.
- Murder: If an insurance company sees that the insured was unlawfully killed at the hands of the beneficiary, they will investigate. The claim will be held in suspense until their investigation is complete, and the likely outcome will be no payout.
To file a claim, you just need to call the insurance company.
Most funeral insurance companies will require that you provide either a death certificate (copies are acceptable) or a funeral home must confirm that they have the deceased’s body.
Also, the beneficiaries will have to sign and complete a beneficiary statement. Once the insurance company has these documents, they can process the claim.
Misleading advertising is one of the most common burial insurance scams.
Basically, a company will use language in an advertisement that appears to convey a message they know not to be true. It’s not a lie per se, but it’s close to it.
Regarding how long a funeral insurance policy takes to payout, ads about quick payout times without context are very common.
Here are some of the typical ways this happens. Don’t take these advertisements at face value. There is critical context they are omitting:
- “Claims paid in 24-48 hours”
- “One-day claim payout”
- “Immediate claim payout”
- “Claims paid in less than 72 hours”
As discussed earlier in this article, the context left out of these ads is that a claim must first be approved before these quoted payout times can be realized.
By far, the biggest offender of this type of deceptive advertising is the Lincoln Heritage Funeral Advantage Program.
Most of their ads exclaim that “Approved Claims Paid in 24 Hours”. Notice that little word “approved”? That’s the key part they know consumers will overlook. The impression they want to convey is that you make your first payment today, and if you die tomorrow, your loved ones will get the full payout within 24 hours. Obviously, that’s not how it works, especially if you die in the first two years.
So be careful when you see ads about final expense insurance. Lincoln Heritage is one of many companies that advertise so deceptively.
Burial insurance is a unique type of whole life insurance. One of the primary differences between burial insurance and traditional life insurance is the expedited claims payout. Most conventional life policies take 14-60 days to pay a claim, whereas burial insurance plans can be paid in less than 72 hours. Read burial insurance vs life insurance for more details.
There is no publicly available data on which company is the fastest at paying death claims. There are only rumors and consumer feedback online. At best, some companies make declarations in their advertisements about how quickly claims are paid. However, those should be taken with a grain of salt. That said, zero life insurance companies contractually guarantee how long it takes for them to pay a death. But generally speaking, you can rest assured that most final expense insurance companies pay out claims (one approved) in two to three business days.
To file a burial insurance claim, you must first call the insurance company. They will ask for a certified death certificate or a copy of one. Alternatively, some companies will allow a funeral home to provide proof of the deceased if they have the body. Beneficiaries will also have to sign a beneficiary statement to validate their identity.
Whether or not a funeral has been completed does not affect when a life insurance policy pays out. What determines the payout speed is A) the type of policy, B) when the insured died relative to how long the policy was active, and in some cases, C) the circumstances surrounding the death. Final expense life insurance is the fastest payout type of life insurance. Usually, approved final expense claims are paid in 24-72 hours.
In most cases, a graded burial policy is a type of modified whole life insurance plan with a waiting period of two years. That means death in the first 24 months will not result in a claim payout. The insurer only refunds your premiums. However, some burial insurance companies use “graded” to describe a partial coverage policy. With those, the insurer would pay out a portion of the death benefit if you die in the first two years. It’s not just a refund of your money. If you’re being offered a graded policy, be sure to ask questions and review your policy carefully so you fully understand how it works.