The Cost of Loss: Recovering Financially After Bereavement

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The death of a loved one takes a heavy toll emotionally. And it induces physical and financial stress as well, as you prepare for the funeral, settle any property issues, and choose a funeral home, among other matters.

But if the breadwinner of the family is the one who passed away, it may be hard for you to manage all the responsibilities that follow immediately after their death.

If you’re going through a similar ordeal, consider these three options to help you get back on your feet after your loved one has passed away.

Claiming Life Insurance

Your loved one’s life insurance is the first option you want to fall back on if he or she has this coverage. When your spouse or parent has applied for life insurance, talk about the benefits and how the payout works so that you’re prepared when the time comes. If not, an experienced life insurance attorney can help you navigate the process and build your claim with the insurance company.

Insurance providers may have different claim processes. But generally, you must submit a certified copy of the death certificate and fill out the forms they will send you. All the adult beneficiaries, if there’s more than one, must submit their own claim forms.

Most states allow carriers 30 days to review the claim. After, the provider will either pay you within 30 to 60 days, deny your claim, or ask for additional information. Traditional life insurance policies have lump-sum payouts, but the modern ones offer an installment payment option.

Your loved one’s policy might have these two policies that can cause payout delays: one- to two-year contestability clause and suicide clause. The former clause means the insurer reviews the original application to make sure your loved one didn’t commit fraud, a year or two after the policy issuance. The latter clause allows the insurance carrier to deny benefits if your loved one commits suicide within the first two years of the policy.

Survivor’s Pension

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You may be eligible to a survivor’s pension benefit from the Veterans Affairs (VA) if the deceased is a veteran with wartime service. But you can only apply if you didn’t remarry or if you have unmarried children. Other requirements include:

  • The veteran must have been in active duty for a minimum of 90 days with at least one day during a war time period, if he or she served before September 7, 1980.
  • The veteran must have been in active duty for a minimum of 24 months with at least one day during a wartime period, if he or she served after September 7, 1980.
  • The veteran cannot have been discharged under dishonorable conditions.
  • Your children must be under 18, 23 if attending any VA-approved school, or permanently disabled.

The amount you receive from the pension will be the difference between your countable income (salary, investment and retirement payments, and income from dependents) and your Maximum Annual Pension Rate, which is based on the number of dependents you have and whether you qualify for Aid and Attendance or Housebound benefits.

The VA’s website offers information on how you can calculate your benefit rates.

Social Security Survivor Benefit

You may be eligible for a Social Security payout if your spouse had Social Security benefits prior to his or her death. The death benefit can either be a lump sum of $255 or regular monthly payments.

You don’t need to apply for a death benefit if you are already receiving it from your spouse’s or parent’s record. But if you’ve been receiving benefits from your own record, you still need to apply for the survivor benefit. Also, an eligible dependent child must send an application within two years of the insured’s death.

Take note that your eligibility for a monthly survivor benefit may diminish if you are employed, remarry before 60, and are eligible for retirement benefits on your own record.

The death of loved one is a trying time, and the last thing you want to worry about as you grieve is money. Hopefully, these three options can help alleviate your financial burden and make your ordeal less taxing.

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