Term (or temporary) insurance is a type of life insurance policy that covers a specified number of years (policy term), typically ranging from 5 to 30 years. If the insured dies during the policy term, a death benefit will be paid to their family or anyone named as the insured's beneficiary on the term life insurance policy. Term life insurance death benefits are not paid out automatically. The beneficiary must first file a claim with the insurance company before the claim is reviewed and payout takes place. The outcome of the process determines whether or not the beneficiary will receive the policy's benefits.
A beneficiary can file a claim online, or over the phone, or in person, depending on the insurance company's policies. Regardless of how you file, you will need to provide information and supporting evidence to process the claim and payout. A beneficiary may be asked to submit a copy of the policy and the claim form when filing a claim.
Contact the insurance company as soon as possible after the insured’s death to file a claim and start the claim payout process. You must also submit a certified copy of the death certificate.
When an insured dies, a beneficiary of the insured’s term life insurance policy begins the claim process with the insurer by reporting a loss. There are various steps to report a loss while filing a claim under term insurance. The insurer will require all relevant documents regarding the death of the insured. These documents typically include:
A completed claim form made available by the insurance company
A certified copy of the insured’s death certificate
Deeds of assignments/re-assignments, if any
Legal evidence of title, if the policy is not assigned or nominated
Form of discharge executed and witnessed
Last medical attendant's certificate
Post mortem report, if the death was not a natural death
Police report (if necessary). A police report may be necessary where there was an accident or an incident requiring a law enforcement report
The claimant should note that the insurer may require more documents to process or investigate the death benefit claim further. Generally, before making a claim, ensure that the following are in check:
The policy is still active, and premiums have been paid
The events that led to the death of the insured are covered under the policy
There is no exclusion mentioned in the policy that applies
Beneficiaries should consider contacting the agent who originally sold the policy or a knowledgeable state-licensed insurance agent in Texas to help them with the claims process.
A claim and a bill are similar and are often used interchangeably in term life insurance. A bill or claim is a payment request by a beneficiary sent to the insurance company after the insured's demise. When a claim is filed, the insurance company will assess it and decide whether it should be authorized and compensated or denied.
Typically, there is no time limit for a beneficiary to file a life insurance claim in Texas unless otherwise stated in the insured’s policy. It is advisable that a beneficiary contacts a Texas-licensed insurance agent after the insured’s death to know whether the insured’s policy has any time limit within which the claim must be filed. As long as the death occurred during the covered term and the premiums were being paid up at the moment of death - the insurer must pay out the death benefit on request.
When you file a death claim, the insurance company will review the claim and the supporting documents submitted, and will usually pay the beneficiary within 2 months of the claim. They will also conduct their own investigation to determine the circumstances surrounding the death of the insured. If you try to conceal or falsify any information, the insurer will reject your claim. Texas insurers generally have 30 days to assess the claim before accepting, denying, or requesting more information. Death benefit payments are made according to the terms agreed upon in the contract if the insurer accepts the claim. However, if the claim is rejected, the insurer will not make payment, but they will provide the reason for the denial.
Claim processing may be delayed if the insurer requires additional time to investigate the insured’s death. For instance, if a homicide is listed on the insured's certified death certificate, the detective assigned to the case may consider the beneficiary a suspect. The death benefit payout for that beneficiary will then be held until any suspicion about the beneficiary's involvement in the insured's death is clear or the charges against the beneficiary have been dropped.
Yes. A term life insurance company in Texas can deny a claim fully or partially. If the insurance company believes that the insured (who is now deceased) or their beneficiaries have breached the contract terms of the term insurance, any filed claim will be denied. You have the right to appeal the insurer's decision if your claim is denied. Contact a legal adviser or attorney if you believe your insurance provider inappropriately denied your claim.
In addition, you may reach out to an insurance agent licensed in Texas to get directions on steps to take to appeal a denied claim.
Term insurance companies in Texas may deny a death benefit claim for various reasons, including:
The insured’s death certificate declares that the insured committed suicide or died of homicide. (In Texas, life insurance does not cover suicide during the first two years of coverage)
There is a mismatch between the facts on the insured’s policy and the information provided by the beneficiary.
The insured fails to reveal any relevant information that may influence their death, such as their lifestyle, dangerous job or hobby, and a debilitating health condition. For instance, suppose a policyholder fails to reveal their smoking and drinking habits while filling out applications; if it is later discovered that the habit influenced their death, the claim will be denied.
The insured files incorrect documentation during registration. An insurance company can deny a claim if the nominee's information is incomplete or outdated. This can occur due to purchasing life insurance and failing to update nominee information, resulting in a claim being denied.
The insured dies during criminal activity perpetrated by them or during dangerous hobbies and activities such as skydiving.
Some top reasons why term life insurance companies deny insurance claims are:
The insured died during unlawful activity, such as driving while intoxicated
The insured provided false information during the policy application
The insured concealed health issues or dangerous hobbies or activities like skydiving
The claimant tries to commit any fraudulent activity during the claims process
The insured stopped paying premiums while they were alive, making their term insurance policy lapse
If the death benefit is denied, talk to the insurance company, contact a Texas insurance agent who can help you communicate with the insurer. If you believe your claim was unjustifiably denied:
File an online complaint with the Texas Department of Insurance,
Call the Helpline at 800-252-3439, or
Get legal help.
Term life insurers typically pay out the insurance policy’s true monetary face value to beneficiaries of the policy.
For example, suppose a 30-year-old male purchases a $500,000 20-year term life policy. If this male pays the monthly or annual premiums, and dies before turning 50 years old, his beneficiaries will receive $500,000.
Generally, it is recommended that a person seeking to purchase term life insurance gets the death benefit 10 to 15 times their annual salary. The most commonly purchased Term Life death benefit in Texas are:
If you believe that your insurance company does not pay enough for your claims, request a formal review by the insurance company. Contact your licensed insurance agent to guide you through this process. If the issue is not resolved after you have requested a formal review, you can engage the services of an attorney experienced in insurance law. You can use the Lawyer Referral & Information Service (LRIS) of the State Bar of Texas to find an attorney.
Per Texas Statutes Section 542.055, term life insurance firms have 15 days to respond to claims and another 15 days to investigate them. They must accept or reject the claim during this time and communicate their decision. The law permits insurers to extend the investigation period to 45 days, but only if they have a good reason to do so. In addition, if your claim is denied, the insurer is required to inform you of the reasons for the denial. The failure of an insurer to acknowledge receipt of an insurance claim is a breach of the law.
To check the status of your term life insurance death benefit claim, contact the insurer: visit the website or mobile application of the insurance company, call the claims department, or ask the life insurance insurance agent to reach out to the insurer in your stead.
As long as the insured is alive, they or their beneficiaries cannot file a death benefit life insurance claim. Term life insurance allows you to file a claim only after the insured dies.
If you have specific questions about how term life insurance death benefits and claims work, speak with a knowledgeable life insurance agent licensed and experienced in Texas.