Dealing with a death is never easy, and the last thing you want is a mountain of complex admin. Here at Compare Cover, we want to make things as simple as possible for you - so we've created this guide to give you an insight into the claims process and how to claim life insurance when someone dies.
Insurance providers are also aware of how difficult paperwork can be at this time, so the process will usually be relatively simple. Read on to find out more.
There's no rush and no time limit to make a life insurance claim, so don't stress. There is, however, a limit to how long a provider can hold on to a policy once they're notified of the policyholder's death, but this is usually a couple of years. After that time, it is passed on to the Unclaimed Assets Register.
If you are going to make a claim, the first thing you should do is contact the insurance provider to let them know. The policy document or the provider's website will have information about how to get in touch in these circumstances.
They will usually want to know the policy number, the name of the person who held the policy, who you are and your relationship to them.
You will then usually be sent a claim form to fill out, which will tell you what documents they require from you or the personal representative of the estate.
To make a claim on a life insurance policy, there are a number of documents that you will usually need. These can include:
For the most part, you shouldn't need to worry about your claim being rejected. In fact, according to figures from the Association of British Insurers, 97.4% of all individual and group life (term) protection claims were paid out in 2019.
There are some rare exceptions when a life insurance claim will not be paid. For example, if the policyholder gave false or inaccurate information regarding their health when they took out the policy
Some policyholders may also have agreed to some policy exclusions when they took out the policy, for example, death due to dangerous hobbies or occupations.
The insurer payout of the claim will differ dependent upon how the life policy was set up. If the life insurance policy was written in trust (find out more about this on our life insurance and inheritance tax guide), the money will be paid to the trustee. In many cases, this process will take a matter of days from receipt of the requested documents.
If you are claiming on a life insurance policy that was not written in trust, then the payout may form part of the estate of the deceased person and will have to go through a legal process called probate or letters of administration. In this case, you will have to wait significantly longer to receive the funds - usually around 9-12 months, depending upon the complexity of the estate.
The person who receives the life insurance payout will also depend upon how the policyholder set up the policy when it was taken out.
If it was set up as a joint policy and not in trust, the payout will go directly to the surviving joint policyholder. If, on the other hand, the policy was set up in trust, the beneficiaries will be the nominated person(s) as outlined in the trust.
If the policyholder didn't name a beneficiary, the payout will go into their estate, to be distributed by a personal representative. The payout will then be distributed by this representative according to the deceased's wishes where a valid will exists. If the policyholder didn't leave a will, an administrator will distribute the estate in line with the rules of intestacy. In either case, the estate may be subject to inheritance tax.
If you're thinking about taking out a life insurance policy, it may be a good idea to write it in trust as your dependants will have access to the payout much faster.
We hope that this guide has answered your questions about making a claim on a life insurance policy. If you need any more information about life insurance, visit our life insurance guides. Alternatively, if you're interested in purchasing a life insurance policy, compare quotes today.
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