How soon after you die does your family recieve money from your ? Is there tax on the money? Say you have a 0K policy, can you increase it?

 

  • morris the cat 9:02 am on February 12, 2010

    LIFE INS IS TAX-FREE TO THE BENEFICIARY- NO TAXES ON THE PROCEEDS–IF SOMEONE DIES- YOU NEED TO PRESENT A DEATH CERTIFICATE TO THE AGENT OF THE COMPANY, OR THEIR LOCAL OFFICE, AND FILL OUT A FORM REQUESTING THE PROCEEDS OF THE POLICY, ALONG WITH THE DEATH CERTIFICATE- after all this is done-if the policy is over 2 yrs old, it is uncontestable- that means, the claim must be paid regardless of the cause of death, even suicide !! if the policy is less than 2 yrs old, it might be contested if the circumstances of death were unusual- if the person dies from a heart attack, for instance, they have to make sure there was no history of heart problems, previous to the policy being taken out–a pre-existing condition-in other words if the person was not totally truthfull about their health, when the policy was applied for-they have to pass the 2yr period of contestablity–if the person has been honest about their health & the co. checks it out- the claim will be paid on a timely basis- if the person died in a car accident, through no fault of their own, that is pretty clear cut–if the policy has an accidental deaath clause/ or double indemnity-pays double in the event of accidental death-that part can be contested or investigated even after 2 yrs-to make sure it was truly an accident, yet the face amt of the policy, must be paid without question, after 2 yrs without any delay- after the form and death certificate have been submitted to the co.!! the policy face of 100K cannot be increased, unless there is an option to purchase additional amts rider on it- say 20K options every 3yrs to age 40, or something like that. a new policy can be puchased, anytime, as long as the person is in good health, and can afford the premium, and show a need for the coverage. if you have any other??, holler back at me. i am a retired Independent Insurance Broker for life and health– 23 yrs in the business, with only one death claim !!(cancer) I am a retired CFP & CPA & LUTCF also. good luck to you….

  • purple 9:02 am on February 12, 2010

    they wont let you raise a insurance policy after you find out something is wrong..there is a tax when you file income tax..it takes about 2 weeks after a person dies.

  • Girl360 9:02 am on February 12, 2010

    1. How soon after you die depends on: how you died, whether or not the insurance company needs to do an investigation, and whether the beneficiaries are easily reached. For example, if you die in a car accident with your named beneficiary and have no contingents, well…your next named beneficiary of your estate will get some money, but it will go through probate, which will eat up some of the costs. If you died under strange circumstances, they’ll do ‘due diligence’ and investigate the claim.

    2. In the vast majority of situations, benefits are tax-free to the beneficiary. Be careful if you’re buying it for someone else, though. Example: you’re the owner, insuring someone else, and leaving another person as the beneficiary. This creates a taxable situation. If you’re the owner AND insured, and name someone, then no tax.

    3. You can always increase your insurance if you are, in fact, still insurable. With a little extra premium, of course. ;)

  • obe_dawg 9:02 am on February 12, 2010

    When you die, your family will have to send Proof of Death to the insurance company. The insurance company will then pay to the beneficiary named on the policy. How long it will take varies between companies. Some will investigate, and some will pay right away.

    There is no tax due on life insurance proceeds.

    If you have $100k coverage, you can increase it anytime. Be careful not to buy another policy to meet your demand (because each policy cost about $75-$200).