Life Insurance Claims
A life protection policy covers the life assured in the event of death and in some cases the diagnoses of a specified serious illness. At some stage the benefits of the policy will be paid out to the beneficiary noted on your will, assuming the event happens within the term of the policy. Here we take a look at what you need to know in the event that you need to make a claim on a life policy you may be a trustee on or joint owner.
Claims Process Phrases
Firstly, common phrases you may come across in the claims process are:
- Will and Testament - A legal declaration by which a person names one or more people to manage his or her estate which states their wishes for the distribution of his or her property and assets after their death.
- Executor - A person you appoint through your Will to carry out the terms of your Will.
- Beneficiary - A person who receives advantage from something, especially a trust, will, or life insurance policy.
- Death Cert - An official statement from a doctor, of the cause, date, and place of a person's death.
- Letters of Administration - A legal document entrusting an individual with the administration of the estate of a deceased person if they did not make a formal Will.
Who makes the claim?
The life assured noted on the policy and/a spouse are usually the policy owners also. In this case, the claim will be made by the person legally entitled to do so i.e. the executor of their Will or spouse, surviving policy owner etc. If the policy has been assigned to a bank for a loan or a mortgage, the bank will usually make the claim on behalf of the deceased once they have been notified of the death as the loan repayments have paused during the freezing of the deceased assets.
How to make the claim?
The first thing the executor/second life of the policyholder will need to do is to contact the life company. The executor will be required to fill out a claim form along with providing proof of legal entitlement to claim on the policy. They will also be required to provide proof that the event has occurred. This can be proven by a death certificate. The original policy document may also need to be presented when making a claim or a lost policy declaration.
Paying out the claim
The life company will then take all the information and determine if the claim is valid or not. They will want to confirm the life assured has passed away and this has been officially noted and also what the cause of death was. They will then request all medical information required to ensure the claim is valid. They will also check that the policy was not subject to any exclusion. For example, most life insurance companies won’t pay out on death by suicide, within the first year of the policy. They may also check that there was no deliberate non-disclosure of information that would invalidate the policy. The executors validity will need to be confirmed also through sight of the Will, to ensure they are paying out to the correct person.
Once the executor is paid the cover amount, usually through the solicitor, and the life company has cancelled the policy, the executor is then supposed to adhere to the estate beneficiaries noted in the Will. The executor should follow the Will to the letter, as per the deceased's wishes.
Rejection of a claim
Most claims that are made tend to be paid out with many of the life companies we compare paying out 98% of their death claims. However, there are cases of fraud which has resulted in extra background checks to make sure the claim is genuine and legitimate. The main reason a claim would be rejected would be due to deliberate non-disclosure of information or if the policyholder had wrongly faked their death.
It is worth noting that certain illnesses on a serious illness policy are not covered. Therefore, if you do get diagnosed with an illness not listed on your policy you will not be paid out. Similarly, if you died while committing a crime or an act of terror, the policy would also not pay out.
If you are unsure about any policy details you can check our Life Insurance FAQ page to see if you can find the answer to your question. If you are unable to find the answer you are looking for our staff are here to help you with any queries you may have. Give us a call on 01 4003434 and the team will be happy to help you.