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How To Utilize Your Death Claim Amount?

Life Insurance Policies are aimed at securing the lives and futures of the policyholders and their families. The amount received as sum assured can be used in multiple ways, from education purposes to settling debts. The goal is to have the loved ones financially secured and to make sure they are never stressed due to monetary constraints. This article will discuss the steps to claim death benefits and the various utilizations of the amount. 

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What is Death Claim Amount?

The amount that the insurance company pays after the policyholder passes away is referred to as the Death Claim Amount. The policyholder selects the amount at the beginning of the insurance purchase and pays premiums in accordance with that amount.

After the policyholder dies, the nominees or surviving family members/dependent will be able to maintain their standard of living with the death benefit. To receive the amount, the nominees must go through the claim settlement process after the death of the policyholder. The insurance company will then evaluate the matter and as a result, settle the claim intimated by the nominee.

For example, Mrs. Neelam, a 35 year old non-smoking female with yearly income of 15 Lakhs, had purchased a life cover of term insurance of Rs. 1 Crore for her daughter’s financial security. After the death of Mrs. Neelam, her daughter (the nominee/claimant) initiated the claim settlement process by letting the insurer know about the unfortunate event and followed the settlement procedure to receive the death claim amount. Once the claim was settled by the insurer, the daughter received the amount intended towards her wellbeing by her mother.

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How to Utilize The Death Claim Amount?

The policyholder has certain future goals and ambitions towards his/her dependents or loved ones when he plans to buy a life insurance policy. The fear of death is by itself very stressful, and added to that is the fear of seeing your family in financial stress. Therefore, the death claim amount is aimed at protecting your loved ones at times of distress when you will not be around to loo after them. But, how will your family (the nominees) know what the best utilization of the money will be? Although their personal and financial situation will determine the use of the death claim amount, here are a few ways the amount can be utilized:

  1. Pay off pre-existing debt/loans

    After the death of the policyholder, the family may end up receiving his/her share of existing debts and loans. Therefore, as the recipient of the death claim amount, you can pay those off and lead a life without financial constraints.

  2. Pay the policyholder’s hospital and funeral bills

    The death is certainly not the end of the journey of life. The family has to finish the last rites of the policyholder, after his/her death, and then plan for the funeral. Under such circumstances, the death claim amount can be of much assistance. Moreover, if there are pending hospital bills, then the amount can also help wave those off.

  3. Compensation for the policyholder’s income

    If you were entirely dependent on the policyholder’s income for your sustenance, then the death claim amount can help you with the daily essentials, so that you can continue maintaining your previous standard of living.

  4. Pay for children’s education

    With the death claim amount, you can also fund your childrens’ higher education ambitions or pay off the education loans, if there are any.

  5. Invest for future returns

    You can aim for future returns with investments, such as Endowment plans, ULIPs, etc. With these plans, you can be assured to receive an added income in the future and create wealth from the death claim amount itself.

  6. Buy a new insurance plan

    You can also purchase another life insurance policy with the death claim amount to safeguard the rest of the family for their share of future. This way, the amount will be used doubly to protect another generation of your family and you will live a stressfree life.

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How to Claim Death Benefit?

The death claim process begins once the policyholder passes away, at which point the nominee or claimant may proceed with the death benefit claim. The steps to claim the death benefit are listed below:

  1. Claim Intimation

    The nominee/claimant can initiate the death claim process once the policyholder is no more alive. He/she has to firstly submit the death claim form to the closest insurer’s office, head office, bank branch or by Email, followed by nominee’s ID and Address proofs. The death claim forms are available though both online and offline modes, from the official website of the company and branch/head/bank offices respectively.

  2. Documentation

    Along with the death claim form and ID/Address proofs, the nominee also has to submit relevant documents to the insurer for the verification purpose. Below listed are the documents required to claim the death benefit:

    Death Types Documents Required
    Mandatory Documents Death Claim Form
    Original policy documents
    ID and Address Proof of the Nominee/Claimant
    Canceled Cheque alongwith NEFT details
    Additional Documents Required:
    In case of Medical//Natural deaths Certificate of hospital treating the deceased policyholder
    Consulted Doctor’s Statement
    Policyholder’s Employer Certificate or Educational Institute Certificate
    Additional records of treatment/hospital receipts
    In case of Accidental/Unnatural deaths Police Reports (FIR, Panchnama, Charge sheet, Police Investigation Report)
    Post Mortem report (PMR)/Autopsy and Viscera Report
  3. Death Claim Settlement

    The processing of the claim begins as soon as the insurance company receives the necessary documents. The company then examines and verifies the forms and documents to ensure the nominee has submitted all the necessary papers and is not suspicious of falsely claiming the death claim amount. The insurer finally makes a decision (subject to T&C), and notifies the nominee/claimant of the same.

Things to Consider While Claiming Death Benefit

Despite the fact that the claim process has become simpler in recent times because of the flexible options available, you should keep the following points in mind to ensure smooth claim settlement:

  • Different insurance companies have different claim processing procedures. However, if you need help or have any questions, you may always get in touch with their customer care team.

  • To make an appropriate choice about which insurance company from where you want to purchase a plan, always check the Claim Settlement Ratio (CSR) of multiple insurance companies, as published by IRDAI every year, and make sure to compare the same for five consecutive years.

  • Do not let anyone know about the details of the location where you have saved or kept your claim amount, or do not let any external force/intruder hold authority of your death claim amount.

Wrapping It Up!

Life insurance is meant to solve probable financial problems that may arise after the policyholder dies. The amount that the policyholders saves for the dependents/loved ones is their hard earned money and is kept with much love and care. The utilization of the death claim amount is totally in the hands of the nominess and entirely depends on their necessity and lifestyle demands. However, it is wise to always keep a check of the same and make sure that no external force determines the utilization of your money.


  • How can I get death benefits?

    Ans: To get the payout/death claim amount, beneficiaries must provide the insurer with documentation of the deceased's coverage as well as their death. Life insurance policy death payments are exempt from regular income tax. Beneficiaries may choose to receive a death benefit as a lump payment or in monthly installments.
  • What exactly is a death claim amount?

    Ans: The amount that the insurance company must pay when a claim is made under the policy is known as the "death claim amount." Usually, this happens when the life assured passes away.
  • Is the death benefit guaranteed?

    Ans: The guaranteed death benefit provided varies by company and contract, but the recipient is always entitled to the death claim amount, as per the insurance terms and conditions.
  • What exactly is the death claim process?

    Ans: The death claim process includes intimation of the claim, document submission and the final settlement process. After the fulfillment of all these processes, the death claim amount is submitted to the nominee/claimant.
  • How to calculate the term insurance premium online?

    Ans: You can easily calculate the term insurance premium online by using the term insurance premium calculator online tool
  • What are the benefits of term life insurance?

    Ans: Here are 4 common term insurance benefits:
    • Low premium rates
    • Tax Benefits
    • Death Benefit
    • Long term coverage
  • What is term life insurance?

    Ans: Let's understand what is term life insurance here. Term insurance offers financial protection for a certain period to the policyholder, thereby, offering a lump sum payout if the policyholder unfortunately passes away during the policy term.
  • What are the key features of a best term insurance plan in India?

    Ans: Below mentioned are the key features of a best term life insurance in India:
    • Affordable premium rates
    • Long-tenure life protection
    • Easy to understand and buy
    • Riders availability
    • Whole life protection
    • Tax benefits

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