When a loved one passes away, the last thing you want to be doing is life admin, that's why we're giving you a simple guide on how to make a life insurance claim. 🧐
What is a life insurance pay out?
A life insurance pay out is the sum of money that is paid out upon the death of the policyholder. The amount of the pay out is chosen by the policyholder at the start of the policy.
Does life insurance actually payout?
Contrary to what many people think, 98% of life insurance policies actually pay out. According to the Association of British Insurers, just 2% of policies are left unpaid. 🙌
If you're wondering why life cover wouldn't pay out, read our article What Reasons Would Life Insurance Not Payout?
How to claim on a life insurance policy
When you're ready to make a claim, contacting the insurance provider is the first step. Then, the provider will assess the claim and lastly, the payout will be given.
Having all the relevant details to hand will help the process go a lot smoother, you can find these in the deceased's life insurance documents. You will need:
- the name and birthdate of the policyholder
- their address
- policy number
You will also be required to share your:
- name and contact details
- relationship to deceased
- grant of probate or confirmation if available
You will also be required to provide three documents when claiming a payout. 📄 You'll need:
- the death certificate - this can be supplied in the form of a copy from the funeral director. You might want to request more than one copy if the deceased has multiple life insurance policies
- the complete claim form - this should be available on the insurance company's website
- the policy document - this will have been issued when the policy was purchased
What do we need to know about the death?
You’ll be asked other questions, including:
- the date of death
- the cause of death
- if they left a valid will
- if they had a wife or husband
- if they had children
What else do we need to know about the death?
Depending on the life insurance company and the policy details, certain death causes might cause a delay or for the policy to not pay out at all. Ensure you read the fine print of your policy before purchasing. 🔍
At Bequest, we know this isn't an easy process and we want to make the process as simple as possible. 💛If there's anything else we need, we will ask.
How long does a life insurance claim usually take?
Whilst each insurance company is different, life insurance claims are generally settled any time between a few days and a month. 🗓
If there are no complications and all the right documentation is in place, life insurance payouts should be processed fairly quickly.
What can cause delays in the pay out?
Sometimes, life insurance claims may be delayed if the cause of the policyholder's death is unclear or if the necessary documents are not readily available. It's also common to experience delays if the policyholder passes away within the first two years of taking out the policy.
Having all the right information and documentation before you make a claim can help avoid delays and make the process a lot smoother.
Who can claim on a life insurance policy when someone dies?
Whilst anyone can start a claim, the payout only goes to those named as beneficiaries in the deceased's will Without a will, it can be much more difficult and could force the rules of intestacy to be put in place.
Is there a time limit?
Most life insurance companies do not provide a deadline that a claim needs to be made by. When someone close to you passes away, you might feel like you need to wait a few weeks or more before having to discuss the pay out, this is completely fine.
What do you need to claim?
As mentioned above, to claim a life insurance payout, you will need to be able to provide:
- the name of the policyholder
- the cause of the death which can be found on the back of the death certificate
- the life insurance policy number
- identification for yourself as well as your relationship to the policyholder
Who gets the payout?
If there is a valid claim and a will, the payout goes into an account with the executor of the will. who handles the estate. They will then share the money from the policyholders estate to the beneficiaries according to what the will says. If there there is no will, the deceased's next-of-kin will receive it. ✍️ (Write a will and make this process so much simpler!)
Lastly, if the policy was set up in trust, the life insurance payout will go to the trustee in the policy. Not all life insurance policies are set up in trust though, so this means that the pay out will go to the deceased person's estate. This could mean it is liable for inheritance tax.
Who gets the payout if the beneficiary is also deceased?
If the policyholder's beneficiary is also deceased, the pay out normally goes into the deceased person's estate and goes to the beneficiaries named in the will.
If the person didn't make a will, it's normal for the estate to be passed to the person's spouse or civil partner. 👪
What if the insurer rejects your claim?
It's always best to ask your insurer why your claim has been declined, but here are some of the most common reasons.
- When you buy a life insurance policy, not disclosing everything and not giving an honest account of you or your family's medical history or lifestyle could lead to your pay out being rejected.
- If the policyholder had a term life insurance policy, it's only possible to make a claim if they died within their term. - For example, they could have had a 40 year term policy and passed away after the term ended, in this case, the beneficiaries would not be eligible for a pay out.
- When claiming a life insurance pay out, it's important you provide all the right information and documents in order for your claim to be processed. If you fail to provide the required information, your claim could be rejected.
What happens to unclaimed life insurance policies?
Believe it or not, some life insurance policies go unclaimed. 🥀
There's only a certain amount of time an insurance company can hold onto a policy for, after that period of time it's passed onto the Unclaimed Assets Register (UAR).
After the policy has been left unclaimed for 15 years, it turns into part of the government's dormant assets and the money then goes to charity.
This is why it's super important to discuss life insurance with your loved ones about single and joint life policies. If your named beneficiary doesn't know they need to make a claim, the money paid in monthly life premiums could have been pointless.
What is the procedure to claim life insurance?
To make a life insurance claim, you need to contact the insurance company and provide the name of the policyholder, the policy number and the cause of the policyholder's death. You will also be required to provide identification for yourself and your relationship with the deceased.
What documents do I need for a life insurance claim?
When claiming a life insurance payout, you will need to be able to provide a death certificate of the policyholder, a completed claim form and the policy document.
Do life insurance policies actually pay out?
According to the Association of British Insurers, 98% of life insurance policies pay out. It's super rare for life insurance policies to not pay out if you are honest when purchasing your policy and pass away within your term.
What is the average life insurance payout?
The average term life insurance payout it £77,535. However, each life insurance pay out is dependent on the type of policy and the pay out amount chosen by the policyholder.
Is life insurance paid out in a lump sum?
Life insurance traditionally pays out in a lump sum or monthly sums. This depends on the type of policy taken out by the policyholder. There are also some similar types of cover that pays out in monthly instalments such as income protection.
What happens if no one claims life insurance?
If a life insurance pay out isn't claimed after a long period of time, the policy is passed onto Unclaimed Assets Register (UAR) where it will be held for 15 years. If it remains unclaimed, it turns into the government's dormant assets and the money then goes to charity as a beneficiary.
How long does it take to receive a life insurance payout?
Life insurance companies prioritise claims, so it's usually a fairly quick process. It can vary between a few days and a month if there are no complications or delays.
How long do you have to make a life insurance claim?
The deadline is usually 15 years to make a life insurance claim, and there is a limit to how long an insurer can keep hold of your policy after the policyholder has passed away.
Who can claim life insurance after death
Whilst anyone can start to make a claim, it's only the named beneficiaries on the life insurance policy that will actually receive the pay out.