How long will your life insurance claim take?
APRA stats show 8% of claims are declined.
OK, yes, fair enough - you'll never actually be able to claim on your own life insurance, what with being dead and all. But if you have taken out life insurance and then your family claim after your presumably unfortunate demise, how long will the process take?
New figures from the Australian Prudential Regulatory Authority (APRA) offer some insights. In 2016 (the most recent data we have), a total of 103,100 life insurance claims were lodged in Australia. Of those, 92.1% were approved, and 7.9% were declined.
A side note: you'd never expect the total of claims processed to be 100%. Some claims will always be rejected due to falling outside policy rules. One common area where people get tripped up is pre-existing medical conditions, as the rules around these vary from policy to policy. You can learn more about this in our guide to life insurance disputes. But most claims are straightforward: 90% of claims are paid "in the first instance", meaning there's no need for further investigation.
By the end of 2016, a total of 16,800 claims, or 13.3%, were "undetermined". This doesn't mean that all those claims took a year or more to process. That figure would include claims lodged in late 2016, which might well have been resolved in early 2017. Just 3.5% of claims during the year actually resulted in a dispute which required further arbitration.
The lesson? Most life insurance claims will go through pretty straightforwardly. Just make sure, as always, that you compare carefully before signing up so you get the best deal for you.
Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears regularly on finder.com.au.