For instance, as the beneficiary on a life insurance policy, a surviving spouse will be entitled to a one-time monetary payment upon the death of the other spouse as specified in the policy.
Likewise, upon the death of an annuity holder, the beneficiary will receive ongoing annuity payments at a percentage of those received by the annuitant. Death benefits are the way in which annuities and life insurance policies compensate those close to or dependent upon the deceased policyholder for the costs associated with death e.
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In either case, proceeds paid through life insurance or annuity death benefits avoid the cumbersome, often costly, process of probate, which ultimately leads to timely payments to survivors. Beneficiaries first need to know which life insurance company holds the deceased's policy or annuity.
Policy information is not kept within a national insurance database or other central location. Instead, it is the responsibility of each insured to share policy or annuity information with beneficiaries.
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Once the insurance company is identified, beneficiaries must complete a death claim form indicating the insured's policy number, name, Social Security number and date of death, and payment preferences for the death benefit proceeds. If you are a dependant of the deceased, the death benefit can be paid as either a lump sum or income stream. If you are not a dependant of the deceased, the death benefit must be paid as a lump sum.
Different rules exist for who is a dependant when making a super death benefit payment superannuation law and the resulting tax treatment taxation law. Super law sets out who a death benefit is payable to and taxation law sets out how the benefits will be taxed. If you believe that you are the beneficiary of a deceased person's super or are the legal representative of a person's estate, you should contact their super fund to let them know that the person has died and ask them to release the person's super.