The death of a loved one not only can take an emotional toll on family members but also can place financial burdens on them. While they wait for the estate to go through probate, they may need to handle urgent expenses, such as credit card bills or a mortgage. You can usually get access to life insurance, Social Security benefits, pensions, and certain other benefits without a long delay after the decedent’s death. These sources usually do not contain significant amounts of money, but they can help take some stress away from beneficiaries in the aftermath of a death.
Life insurance companies likely will not contact beneficiaries, even if it is obvious that the life insurance company knows about the death. A beneficiary will want to file a claim as soon as possible.
The beneficiary of a life insurance policy will need to contact the life insurance company to make a claim under the policy. While they usually can handle this process directly, you may want to help them or explain what they can expect. You will want to check to make sure that the policy remains in effect. If the policy is a term policy, it should be effective if the decedent kept up with paying premiums and died during the term of the policy. (You can contact the company to find out whether the policy was renewed if the original term has expired.) If the policy is a whole or universal life insurance policy, it should be effective as long as the decedent kept up with payments.
The policy should provide the name of each beneficiary. If a primary beneficiary has died, you should check the policy for alternate beneficiaries for that primary beneficiary. They will be entitled to the benefits that the primary beneficiary would have received. A beneficiary under 18 will need to have the money overseen by an adult until they reach 18.
Each beneficiary will need to submit an official copy of the decedent’s death certificate with the claim form. If the beneficiary is an alternate beneficiary, they will need the primary beneficiary’s death certificate as well. The life insurance company should pay not only the face value of the policy but also reimbursement for unused premiums paid before the decedent’s death. A whole life insurance policy may entitle the beneficiaries to receive dividends earned by the policy as well. In many situations, a beneficiary may be able to choose whether they want to receive payments in installments or as a lump sum.
If the decedent had a life-only annuity, this will not provide any benefits to others after the decedent’s death. However, if the decedent named a beneficiary, and the decedent died before the annuity term expired, the beneficiary will be able to receive the rest of the annuity payments. Annuities may be either fixed or variable. If the annuity is fixed, the beneficiary will receive the accumulated value of the annuity, both the principal and the interest. If the annuity is variable, the amount due to the beneficiary will depend on how the investments in the decedent’s account have performed.
The process of claiming annuity benefits is similar to the process of claiming life insurance benefits. Generally, benefits will be calculated in one of two ways. Either the beneficiary will receive the accumulated value of the annuity, with earnings being included, or they will receive the amount originally invested in the annuity, with distributions being subtracted. The company will use the calculation that provides the greater amount of money to the beneficiary.
Social Security, Pensions, and Veterans Benefits
The surviving spouse or dependent children of the decedent may receive a small death benefit payment from the Social Security Administration if the decedent accumulated enough work credits. This is a one-time payment, in contrast to the more substantial survivors benefits that are paid on a monthly basis. Survivors benefits are based on the decedent’s monthly earnings. Different criteria apply for each group that may be eligible for them, including a surviving spouse, a former spouse, dependent children, and dependent parents. Family members should apply for these benefits as soon as possible because they may not be retroactive.
Family members may be able to receive certain benefits related to a pension plan that the decedent held with a private company or union, or with a government entity. This amount may be limited to a fraction of the payments due to the decedent, and pension benefits for survivors may last for only a short time. Sometimes government pension benefits are more substantial.
While family members are usually not entitled to receive veterans benefits, they may be entitled to some related forms of financial assistance. Some of these options include a wartime service pension (if the spouse or child’s income is very low), reimbursement for the veteran’s burial or funeral costs, and dependency or indemnity benefits if the veteran died during service or died or became disabled because of a service-related injury.
Social Security payments for the month of the decedent’s death must be returned to the Social Security Administration, even if the decedent died on the last day of the month. However, the payment for the month of death likely will arrive in the following month. For example, an August Social Security payment arriving in September will need to be returned if the decedent died in August, but not if the decedent died in September.
Wages of the Decedent
A spouse or another close family member of the decedent may be able to claim any unpaid wages of the decedent if they were working when they died. Family members also may have access to reimbursement for the value of unused vacation days, unused sick days, unpaid bonuses and commissions, and other factors. The employer’s director of human resources usually will handle this matter. In some states, the spouse or other family member will need to submit a signed affidavit with their request for wages. The state may impose a limit on the amount that can be collected.
Other Types of Financial Assistance
While the estate proceeds through probate, family members may be able to receive a family allowance to cover their short-term expenses. Spouses also may receive certain property rights, such as the right to use the family car or stay in the family home for a certain period after the death. You can make a formal request for a family allowance in probate court. However, you may not find an allowance necessary because money from life insurance and other funds that do not go through probate may be enough to meet the family’s needs.
Other forms of benefits to which a decedent’s family members may be entitled include workers’ compensation benefits, federal employment benefits, state disability benefits, union benefits, health insurance benefits for funeral expenses, and railroad employee benefits. If the decedent was killed in an avoidable accident caused by someone else, a family may be able to get compensation through a wrongful death claim.