Social Security insurance does more than pay out monthly benefits to retirees. For example, it also pays survivor benefits to a spouse or dependent child who qualifies by age or disability. In addition, Social Security makes a lump sum payment to a survivor when a covered worker dies. However, only specific family members qualify, and you have to apply to get the money.
The one-time Social Security death benefit is similar to a small life insurance policy. It's paid to the survivors of an insured worker, even if that worker wasn't collecting Social Security at the time of his death. You won't get rich from this payout: It's $255 as of August 2012.
Living arrangements play a role in who gets the payment. The person with first priority is the surviving spouse who was living with the insured at the time of his death. If the two were separated, the surviving spouse can still receive the death benefit on one condition. She must already be collecting Social Security based on her spouse's work history at the time of his death.
Social Security will pay the death benefit to a child only when a spouse doesn't qualify. The child must qualify as a dependent in the month the parent died. In general, an unmarried child is eligible until age 18, or 19 if he's a full-time student in secondary school. A disabled child qualifies regardless of age if the disability occurred by the age of 22. If no child qualifies, the benefit will not be paid to anyone.
The death benefit is not automatic, and you must make the claim in person. The Social Security Administration recommends contacting them as soon as possible after a death. Call 1-800-772-1213 to arrange an appointment at a local Security Office. If you're hearing-impaired, call 1-800-325-0778. The local rep can take your claim for the payment, and tell you if you or someone else qualifies for monthly payments. In any case, you must claim the death benefit within two years of the worker's death.