By OLPolicy | Licensed Insurance Specialists | (866) 757-5350
Losing someone you love is hard enough. The last thing your family should have to deal with in that moment is confusion over how to collect an insurance payout.
Yet every year, thousands of families delay or miss insurance benefits entirely not because the coverage wasn’t there, but because nobody explained how the claims process actually works.
This guide changes that. Whether you just purchased a final expense policy, are shopping for one or you’re a family member trying to understand what happens after a loved one passes, this article walks you through the entire payout process from start to finish in plain, everyday language.
| Quick Answer
When the insured person passes away, the named beneficiary contacts the insurance company, submits a few simple documents (including a death certificate), and receives the full death benefit typically within 14 to 30 days. The money can be used for anything. |
Before we get into the claims process, let’s make sure the foundation is clear. Final expense insurance is a type of whole life insurance. That means:
The benefit amounts are intentionally modest typically between $5,000 and $50,000 because the goal isn’t income replacement. It’s to make sure your family doesn’t come up short when funeral and end-of-life bills arrive.
| ✅ The Core Promise of Final Expense Insurance
You pay your monthly premium. When you’re gone, your family makes one call, submits a few documents, and receives a check no lengthy investigation, no complicated process, no guessing. |
Here is exactly what happens from the moment of death to the moment your family receives the money.
| 1 | Notify the Insurance Company
Your beneficiary (the person named on the policy) calls the insurance company’s claims department to report the death. The number is usually on the policy documents, the carrier’s website or the back of any premium payment receipts. If you purchased through OLPolicy, you can also call us at (866) 757-5350 and we’ll help guide your family through this step. |
| 2 | Request a Claims Packet
The insurer will mail or email a claims packet to the beneficiary. This includes the official claim form that needs to be filled out with basic information about the deceased and the beneficiary. |
| 3 | Gather the Required Documents
This is the step that most people stress about but it’s simpler than it sounds. In most cases, you only need a handful of documents (listed in the next section). |
| 4 | Submit the Claim
The completed claim form and supporting documents can typically be submitted by mail, fax or online depending on the carrier. Some insurers now have digital portals that make this very fast. |
| 5 | The Carrier Reviews the Claim
The insurance company reviews the submitted documents to verify the policy is in force, confirm the cause of death, and ensure the beneficiary is properly identified. This usually takes 5 to 15 business days. |
| 6 | Payout Is Issued
Once approved, the insurer sends the death benefit to the beneficiary by check in the mail or by direct deposit into their bank account. Most straightforward claims are paid within 14 to 30 days of submission. |
One of the biggest reasons families delay claims is not knowing what paperwork to pull together. Here’s a complete list so there are no surprises:
| Document | Where to Get It |
| Certified copy of the death certificate | Funeral home or county vital records office order at least 3–5 copies |
| Completed claim form | Provided by the insurance company in the claims packet |
| Original insurance policy (if available) | With the insured’s personal documents not required, but helpful |
| Beneficiary’s government-issued photo ID | Driver’s license, state ID or passport |
| Beneficiary’s Social Security Number | For IRS reporting on the payout |
| Banking details (for direct deposit) | A voided check or bank account and routing number |
| Pro Tip for Policyholders
Right now before anything happens write down your policy number, the carrier’s claims phone number, and where your policy documents are stored. Put it somewhere your beneficiary will find it. This one simple step can save your family hours of stress. |
This is the question families ask most. Here’s a realistic, carrier-agnostic timeline for a standard final expense claim:
| Timeline | Stage | What’s Happening |
| Day 1–3 | Family contacts carrier | Your beneficiary calls the insurance company to report the death and request a claim packet. |
| Day 2–7 | Documents gathered | The family collects the death certificate, policy documents, and completes the claim form. |
| Day 5–10 | Claim submitted | All documents are mailed, faxed or submitted online to the insurance carrier. |
| Day 10–20 | Carrier reviews claim | The insurer verifies the policy, checks the cause of death, and confirms all paperwork is complete. |
| Day 14–30 | Payout issued | Once approved, a check or direct deposit is sent to the beneficiary typically within 30 days of submission. |
| 30+ days | Contested claims (rare) | If the death occurs during the contestability period or documents are missing, the timeline may extend. |
Most state insurance regulations require carriers to process and pay valid life insurance claims within 30 days of receiving all required documents. If the claim is delayed beyond this window without a valid reason, the insurer may owe the beneficiary interest on the unpaid amount.
| ⚠️ Watch Out: Incomplete Documents Are the #1 Cause of Delays
The most common reason a claim takes longer than 30 days is missing paperwork. The fix is simple: when you submit, include everything on the checklist above even documents you think might not be needed. When in doubt, include it. |
Once the claim is approved, the beneficiary has a choice in how they receive the money (options vary by carrier):
| Payout Method | How It Works | Best For |
| Lump-Sum Check | A single check mailed to the beneficiary for the full death benefit amount. | Most families simple, fast, and flexible. |
| Direct Deposit (EFT) | Funds transferred electronically into the beneficiary’s bank account. | Those who want the fastest possible access to funds. |
| Interest-Bearing Account | Some carriers hold the funds in an account that earns interest while beneficiary decides. | Beneficiaries who need time to make financial decisions. |
The vast majority of beneficiaries choose a lump-sum payment it’s the simplest and gives your family full control over how the money is used.
Here’s one of the most important things to understand: once the money is paid to your beneficiary, it belongs entirely to them. There are no restrictions on how it gets spent.
Most families use final expense payouts to cover:
| ✅ No Restrictions on the Payout
Unlike pre-need funeral plans (which are paid directly to a funeral home), a final expense insurance policy pays your beneficiary directly. Your family chooses how to spend it giving them full flexibility when they need it most. |
If you purchased a graded benefit or guaranteed issue final expense policy, there is typically a two-year waiting period for natural causes of death. This is one of the most misunderstood parts of final expense insurance so let’s clear it up completely.
If the insured person passes away from a natural cause (illness, disease, etc.) during the first two years of the policy, the insurance company does not pay the full death benefit right away. Instead, the beneficiary typically receives:
This means your family still gets money back they just don’t get the full death benefit during that waiting window.
Here’s the important exception: if the insured dies in an accident (a car crash, a fall, etc.) during the waiting period, most graded benefit policies pay the full death benefit immediately no waiting period applies.
After the two-year waiting period is over, the policy pays the full death benefit for any cause of death with no exceptions. From that point on, your family is fully protected.
| Already Have a Policy? Check the Type
If you’re not sure whether your policy is level benefit (no wait), graded benefit (2-year wait) or guaranteed issue, look at the first page of your policy it should be clearly labeled. You can also call OLPolicy at (866) 757-5350 and we’ll pull it up for you. |
Every life insurance policy including final expense includes a contestability period, which is typically the first two years after the policy is issued. During this window, if the insured passes away, the insurance company has the legal right to review the application to make sure everything was answered honestly.
If the insurer finds that the insured intentionally lied on their application, they may reduce or deny the claim. This is why honesty during the application process is so important and it’s why our specialists at OLPolicy walk every client through their health questions carefully before submitting.
If the application was accurate and complete, a contestability review is just a formality. The claim is approved and the full benefit is paid. After the two-year contestability window closes, the policy is incontestable the carrier cannot deny a valid claim for any reason.
| ⚠️ Always Answer Health Questions Honestly
We know it’s tempting to downplay a health condition hoping it won’t matter. But misrepresentation can cost your family the entire benefit. A good agent like the specialists at OLPolicy will find you a policy you genuinely qualify for, even with serious health conditions. |
| ❌ MISTAKE: The beneficiary doesn’t know there’s a policy.
✅ WHAT TO DO INSTEAD: Tell your beneficiary right now today that the policy exists, where the documents are, the carrier’s name, and the policy number. This alone prevents most delays. |
| ❌ MISTAKE: Filing without a certified death certificate.
✅ WHAT TO DO INSTEAD: Order at least 3–5 certified copies from the funeral home or county clerk immediately after the death. Most carriers will not process a claim without an official certified copy a photocopy is not accepted. |
| ❌ MISTAKE: Waiting too long to file the claim.
✅ WHAT TO DO INSTEAD: File the claim as soon as you have the death certificate ideally within the first week. There’s no advantage to waiting, and the sooner you file, the sooner your family has access to the funds. |
| ❌ MISTAKE: Assuming you need a lawyer to file a claim.
✅ WHAT TO DO INSTEAD: Life insurance claims do not require a lawyer in the vast majority of cases. The claims process is designed for regular people to handle on their own. If you run into complications, your insurance agent can help and OLPolicy is always available at (866) 757-5350. |
This is one of the most common questions we get and the answer is good news for most families.
In most cases, life insurance death benefits including final expense payouts, are completely income-tax free for the beneficiary. The IRS generally does not consider a life insurance death benefit as taxable income.
There are a few limited exceptions to be aware of:
For the average family receiving a $10,000 to $25,000 final expense payout, there is typically no tax impact whatsoever. But if you have specific concerns, it’s always worth a quick conversation with a tax professional.
If you already have a final expense policy in place great. But the policy only helps your family if they know it exists and know what to do. Here’s what every policyholder should communicate to their beneficiary today:
| The insurance carrier’s name and phone number | So they can call the right company immediately |
| Your policy number | Speeds up the claims process significantly |
| Where the physical policy documents are stored | Filing cabinet, safe, email folder wherever you keep them |
| Your agent’s name and contact info | OLPolicy: (866) 757-5350 we’ll help guide the claim |
| Your beneficiary’s role in the process | They will need to initiate the claim it won’t happen automatically |
A simple printed sheet with this information kept with your important documents can save your family hours of confusion and stress at the worst possible time.
| Questions About Your Final Expense Policy?
Our licensed specialists at OLPolicy are ready to walk your family through every step from application to claim. 📞 Call OLPolicy: (866) 757-5350 |
Most straightforward claims are paid within 14 to 30 days of submitting all required documents. State regulations in most states require insurers to pay valid claims within 30 days.
No the payout goes directly to the beneficiary with no restrictions on how it’s spent. They can use it for funeral costs, bills or anything else they need.
If the named beneficiary has already passed, the death benefit typically goes to the contingent (secondary) beneficiary if one was named. If no contingent beneficiary was listed, the proceeds may go through the insured’s estate.
Yes, but it’s rare for straightforward claims. Common reasons include misrepresentation on the application, death during the graded benefit period or an active contestability review. Honest applications and accurate paperwork prevent most denials.
No the beneficiary must initiate the claim by contacting the insurance company. The death benefit will not be paid out automatically, which is why it’s so important that your beneficiary knows about the policy.
Yes most carriers allow you to name multiple beneficiaries and specify what percentage each person receives. You can also name a contingent beneficiary as a backup.
Contact the insurance company directly with the insured’s name, Social Security number, and date of birth they can locate the policy in their system. If you’re unsure which carrier holds the policy, OLPolicy can help at (866) 757-5350.
Final expense insurance is designed to be simple for you and for your family. You pay a manageable monthly premium, and when the time comes, your loved ones follow a clear, straightforward process to receive the payout. No lengthy investigations. No confusing red tape. Just the financial protection you put in place doing exactly what it was designed to do.
The best thing you can do right now whether you already have a policy or are still shopping for one is make sure the right people know it exists and know what to do.
And if you ever need help with anything along the way, OLPolicy is here. Our licensed specialists can guide you through the application, answer questions about your existing policy or help your family navigate a claim.
OLPolicy | Licensed Insurance Agency | (866) 757-5350 | olpolicy.com
This article is for educational purposes only. Policy terms, payout timelines and tax rules vary by carrier and jurisdiction. Consult a licensed agent or tax professional for advice specific to your situation.
