Delayed Life Insurance Claims and Prompt-Pay Laws

Start with the type of coverage

The rules that apply to a slow claim depend on where the coverage came from:

State interest-on-proceeds laws

Many states make an insurer pay interest when a death benefit is paid late. These statutes do not force payment of a disputed claim, but they mean delay has a cost for the insurer and that the beneficiary should not simply lose the time value of the money.

New York

New York’s statute sets out interest in three situations:

• No lawsuit filed. Interest on the amount paid is computed daily, at the rate the insurer currently pays on proceeds left under its interest settlement option, from the date of death to the date of payment, and is added to the payment. N.Y. Ins. Law § 3214(c).
• Judgment against the insurer. Interest runs from the date of death to the verdict or decision, then under the state’s general judgment-interest rules. § 3214(a).
• Settlement after suit is filed. Interest runs from the date of death to the date of payment. § 3214(b).

Interest under this section is not owed for a stretch of time already covered by a separate state or federal interest duty that applies when the insurer deposits contested proceeds with a court, and it does not apply to policies issued before September 1, 1975 that contain specific contrary provisions. § 3214(d)–(e).

Other states

The trigger date and the rate vary a great deal from state to state:

• California charges interest from the date of death when an insurer has not paid within 30 days after the death; see the California page.
• Florida starts interest on a lump-sum death benefit the day the insurer receives written proof of death, at no less than Moody’s corporate bond average for that day (Fla. Stat. § 627.4615).
• Georgia runs interest from the date of death, at 6% a year or the insurer’s settlement-option rate if higher; once a claim is filed, the rate jumps to 12% starting 30 days after filing. Proceeds paid within 30 days of death, and policies issued within 12 months before the death, are outside the rule (O.C.G.A. 33-25-10; see the Georgia page).
• Indiana gives a resident beneficiary of an Indiana-issued individual policy interest, counted from the date of death, if payment is not delivered or mailed within 30 days after the death; the rate is at least what the company pays on proceeds left on deposit, and a court award of interest replaces it. Ind. Code 27-1-12-35.
• Kansas has one of the shortest fuses: interest begins if proceeds are unpaid 10 days after due proof of death (K.S.A. 40-447; Kansas page).
• Kentucky imposes 12% a year once 30 days pass after notice and proof of claim without a good-faith attempt to settle (KRS 304.12-235; Kentucky page).
• Louisiana has two layers. Interest at the insurer’s deposit rate begins 20 days after due proof of death (La. R.S. 22:908), and if the claim is not settled within 60 days of proof without just cause, the amount bears 8% a year from the date proof arrived (La. R.S. 22:1811).
• North Carolina charges interest from the date of death if benefits are not paid within 30 days after satisfactory proof of death, at no less than the insurer’s rate on proceeds left on deposit (G.S. 58-58-110; North Carolina page).
• Ohio owes interest from the date of death on a lump sum for an insured who lived in Ohio, however fast the claim is paid (R.C. 3915.052; Ohio page).
• South Carolina adds interest at the legal rate from the date of death when a lump sum is not paid within 30 days after proof of death and the needed claim papers (S.C. Code 38-63-80; South Carolina page).
• Tennessee starts interest on the 15th day after death, compounded annually, for up to three years (Tenn. Code Ann. 56-7-315; Tennessee page).
• Texas runs ordinary interest from the date the insurer receives due proof of loss until it accepts the claim and offers to pay, at the policy rate or, if none, its rate on proceeds left on deposit (Tex. Ins. Code § 1103.104). The bigger number is in the Prompt Payment of Claims Act: an insurer that misses the chapter’s deadlines owes 18% a year as damages plus attorney’s fees (§§ 542.058, 542.060).

Each of these has exceptions and details covered on the state pages.

When delay becomes bad faith

Interest makes delay expensive; bad-faith law can make it far more so, and the states split sharply on how. Oklahoma treats an insurer’s unreasonable, bad-faith refusal to pay as a tort that can support consequential and, in a proper case, punitive damages, though simply litigating a genuine dispute is not bad faith (Christian v. American Home Assurance Co., 1977 OK 141; see the Oklahoma page). Ohio recognizes a similar tort when a refusal to pay “is not predicated upon circumstances that furnish reasonable justification therefor” (Zoppo v. Homestead Ins. Co., 71 Ohio St.3d 552 (1994)). Georgia uses a statute instead: after a 60-day written demand, a bad-faith refusal adds up to 50% of the loss or $5,000, whichever is greater, plus attorney fees (O.C.G.A. 33-4-6). Colorado is a useful caution: its statute allowing two times the covered benefit for an unreasonable delay or denial says it does not apply to life insurance issued under Colorado’s life insurance article (C.R.S. 10-3-1115(6); see the Colorado page). Kansas requires a court to award a reasonable attorney fee when the insurer refused “without just cause or excuse” to pay the full loss (K.S.A. 40-256). Missouri’s vexatious-refusal statute, which names life insurance, lets the court or jury add damages of 20% of the first $1,500 and 10% of the rest, plus a reasonable attorney fee, when the company refused to pay without reasonable cause or excuse (Mo. Rev. Stat. 375.420; see the Missouri page). For employer group coverage, ERISA generally displaces these state remedies; see Employer group life and ERISA.

Claim-handling standards

Separate from interest statutes, most states have unfair claims settlement practices laws that address things like acknowledging claims, responding to communications and affirming or denying coverage within a reasonable time. These usually are enforced by the state insurance department.

Most of these laws trace back to a model written by the National Association of Insurance Commissioners. The NAIC’s Unfair Claims Settlement Practices Act (Model 900) lists practices such as failing to acknowledge claim communications with reasonable promptness, refusing to pay without a reasonable investigation, and failing to affirm or deny coverage within a reasonable time after the investigation is done. Under the model, a practice is a violation when it is done knowingly or often enough to show a general business practice, and the model says it does not create a private right to sue. The companion life, accident and health regulation (Model 903) supplies numbers:

• claim forms and instructions within 15 days after notice of a claim;
• any needed investigation begun within 15 days after proof of loss arrives;
• a reply within 15 days to written communications about a pending claim;
• a written explanation if the claim is still unresolved 30 days after proof of loss, and a letter every 45 days after the first notice while the investigation continues;
• payment offered within 30 days after the insurer affirms liability on an undisputed amount.

A model is not law until a state adopts it, and states change the wording and the numbers when they do. New York, for example, requires the insurer to accept or deny within 30 working days after receiving a properly executed proof of loss (N.Y. Ins. Law § 2601(a)(4)), while Texas writes its own deadlines into statute (see the Texas page).

Employer group life: federal ERISA deadlines

For most employer-sponsored plans, the U.S. Department of Labor’s claims-procedure regulation sets minimum standards. For a life insurance claim (not health or disability), the key timing rules are:

• Initial decision. A full or partial denial must reach the claimant within a reasonable time, and 90 days after the plan receives the claim is the outer limit. One extension of up to 90 more days is allowed for special circumstances, and only with written notice before the first 90 days end that explains the reason and the expected decision date. 29 C.F.R. § 2560.503-1(f)(1).
• What a denial must say. The notice must give the specific reasons, refer to the plan provisions relied on, describe any additional information needed and why, and describe the review procedures and time limits, including the right to sue under ERISA § 502(a) after review. § 2560.503-1(g)(1).
• Time to appeal. A beneficiary gets 60 days or more from receiving the denial to ask for review. During that review the beneficiary may send in letters, records and other evidence, and may ask for the claim file and other relevant papers at no cost. § 2560.503-1(h)(2).
• Decision on appeal. Generally due within 60 days after the plan receives the appeal, with one extension of up to 60 days on written notice. § 2560.503-1(i)(1)(i).
• Consequence of ignoring the rule. A plan that lacks compliant procedures, or does not follow them, cannot hold the beneficiary to its internal appeal. The regulation treats the internal remedies as used up, so the beneficiary may go straight to the remedies ERISA § 502(a) provides. § 2560.503-1(l)(1).

Note that the regulation’s clock is about decisions. A plan can satisfy it by issuing a timely denial, which is why a written request for the specific reason and the documents relied on is often the most useful next step.

When an insurer says the claim is in “legal review”

“Legal review” or “claims review” is not a legal category with its own deadline. It usually means the file has been sent to someone with authority to deny, contest or pay. Common reasons include a death within the contestability period, a question about who the beneficiary is, or a cause of death that may fall under an exclusion. The deadlines and interest rules above keep running during that review. See the contestability period for the most common trigger.

A practical checklist for a slow claim

1. Write down the date of death, the date the claim was submitted and the date of every insurer request.
2. Ask in writing for the status, the specific reason for any delay and the list of anything still needed.
3. Identify whether the coverage is an individual policy or employer group coverage.
4. If it is an individual policy, look up the governing state’s interest statute and the insurance department’s complaint process.
5. If it is employer coverage, ask the plan administrator for the summary plan description and track the 90-day and 60-day deadlines.

If an individual claim has stalled past these deadlines, the firm that publishes this site, Life Claim, reviews delayed claims at no charge.

Sources

• 29 C.F.R. § 2560.503-1, Claims procedure (eCFR): ecfr.gov. Text via the Legal Information Institute copy of the eCFR.
• 29 U.S.C. § 1003 (official text, U.S. Government Publishing Office): govinfo.gov.
• NAIC Model 900 and Model 903 (NAIC publications): Model 900, Model 903.
• Colorado C.R.S. 10-3-1115 and 10-3-1116 (Colorado Revised Statutes 2026, Title 10, Office of Legislative Legal Services PDF): olls.info.
• Florida Statutes § 627.4615 (official text, Online Sunshine): leg.state.fl.us.
• Georgia O.C.G.A. 33-25-10 and 33-4-6 (Justia copies of the official code): 33-25-10, 33-4-6.
• Ind. Code 27-1-12-35 (official text, Justia): law.justia.com.
• Kansas K.S.A. 40-447 and 40-256 (official text, Kansas Revisor): 40-447, 40-256.
• Kentucky KRS 304.12-235 (official text): legislature.ky.gov.
• Louisiana R.S. 22:908 and 22:1811 (official text, Louisiana Legislature): 22:908, 22:1811.
• Mo. Rev. Stat. 375.420 (official text, Missouri Revisor): revisor.mo.gov.
• New York Insurance Law § 3214 (official text): nysenate.gov.
• New York Insurance Law § 2601 (official text): nysenate.gov.
• North Carolina G.S. 58-58-110 (official text): ncleg.gov.
• Ohio Rev. Code 3915.052 (official text): codes.ohio.gov.
• Zoppo v. Homestead Ins. Co., 71 Ohio St.3d 552, 1994-Ohio-461 (Supreme Court of Ohio PDF): supremecourt.ohio.gov.
• Christian v. American Home Assurance Co., 1977 OK 141 (OSCN, the Oklahoma courts network): oscn.net.
• South Carolina Code 38-63-80 (official text): scstatehouse.gov.
• Tennessee Code 56-7-315 (Justia copy): law.justia.com.
• Texas Insurance Code §§ 542.055-.060 and 1103.104 (official text, Texas Legislature): ch. 542, ch. 1103.

Not legal advice. This page summarizes general rules and the specific statutes cited. Your policy's wording, the state whose law applies, and whether the coverage came through an employer can all change the result. See the disclaimer and editorial policy.