Redeeming life insurance on death
On other occasions we have talked on the blog about life insurance, we have detailed the coverage they offer, when and why we should take them out, as well as the different types that exist. But what happens when the insured dies? Do you know the procedure you have to follow? Here I explain in detail what you have to do:
In many cases it is not really known whether the relative had a life insurance policy, whether he/she took it out but stopped paying it and cancelled it, or whether he/she was evaluating it if in the end he/she took it out or not. Another situation that can also occur is that you know that your relative did take out a policy of these characteristics, but you do not know if you are the beneficiary or not. For these cases there is the: Registry of Death Coverage Insurance Contracts. All life insurance policies are registered here, so if you have any doubts, you should go to the Ministry of Justice and ask for a certificate to consult this registry.
To do so, you need a certificate that you can obtain by going, personally or by mail, to the General Registry of Last Will and Testaments or in any Territorial Office of the Ministry of Justice, this document must be accompanied by the death certificate of the deceased relative.
This check can only be carried out 15 days after death.
- Once it has been verified that there is a policy in the Registry of Contracts corresponding to your family member, it will take 7 days to issue you a certificate containing the following information: the policy number, policy holder and the entity with which it was contracted.
- With this certificate proving that your relative had a life insurance policy and that it was in force at the time of his death, you must inform the insurance company in order to initiate the pertinent procedures. There you will be given the following documentation:
- Certificate with the data of the beneficiaries of the policy and the premiums that belong to each one.
- Insured’s data
- Policy number
Now is the time to pay the Inheritance Tax. To do so, you have to fill in the forms 660, 650 and 651. You have six months to pay it from the date of death.
The Inheritance Tax is a regional tax and is paid at the Tax Administration of the Autonomous Community where the deceased had his habitual residence, regardless of whether the inheritance is made up of other real estate assets that are in a different autonomous community.
The amount of the tax varies according to the autonomous community, the taxable bases, the deductions covered by the Law, the degree of kinship with the deceased, the receipt of a company as inheritance, the existence of some type of disability on the part of the taxpayer, the fact of receiving the home considered to be the donor’s habitual residence The legislation corresponding to this point is contained in art. 20 of the Inheritance Tax Law. There are also reductions applied by the autonomous community.
Life insurance policies cover the payment of this type of tax, you will only need to bring proof that you have made the payment so that they, in turn, will refund you the amount paid.
Once the steps described above have been carried out, the insurance company will proceed to pay the beneficiaries of the policy the corresponding premiums in each case.
