Life Insurance Claims

Making a life insurance claim: Step-by-step

If you're about to make a claim or make sure your next of kin is familiar with the process, here are the simple steps to keep in mind:

Find the policy documents

The relevant life insurance policy will have details of who to contact about a claim. You may be able to find details of the insurer you need via the deceased's bank statements.

If you can't locate a policy, The Financial Services Council (FSC) could help you out. They can reach out to their life insurance members and asking them to check their records.

Get in touch with the insurer

You can usually let the insurer know you want to make a claim by calling them or by sending an email. They will let you know about the required documentation that you'll need to gather. You'll typically need to confirm:

• The deceased's name
• Their cause of death (stated on the death certificate)
• The policy number
• Your personal details

They'll need this and other information (such as a note from a GP, for example) ahead of any pay-out being made to a beneficiary or beneficiaries.

File your claim

Once you've completed the claim form, submit it to your insurer. They will let you know if any additional details are required. Straightforward claims may take a couple of weeks to process. It can take months, however, for more complex cases to be finalised before any payment can be issued.

Good to know

If your claim is for an ongoing income protection payment, may need to maintain your policy by updating your insurer with your health status.

Life insurance claim statistics

The table below shows claims and claims related dispute information for life insurance bought through insurers directly, financial advisers and held within a superannuation fund. Sourced via Moneysmart's claim comparison tool for 1 July 2020 and 30 June 2021 period.

• Direct from insurer
• From financial adviser
• Through super

Things to keep in mind when making a claim

• Check the life insurance policy documentation. Life insurance policies and procedures do vary between providers, so it's worth checking the policy document with care. Or, you can simply contact the provider for verification.
• Contact the insurance provider as soon as possible. Notify the insurer of your intention to claim at the first opportunity in what will understandably be a trying time for the family.
• Keep a detailed record of your calls and contact. You may have to contact the life insurance provider on a number of occasions by phone, in writing, by email etc. Make sure that you keep notes of when you made contact, names of people you spoke to, copies of any letters and correspondence that you send in, etc.
• Be organised and get all the required documents ready as soon as you can to start lodging in your claim. This can include things such as a copy of the death certificate and details about the policyholder’s doctor/surgeon.

How to sort out a life insurance dispute or complaint

1. Check your policy. Before doing anything make sure you've read through your life policy to make sure you are actually covered. Check your policy, including the small print, to see whether you actually have a case or whether the insurance firm is acting in line with its terms and conditions.
2. Speak to your provider. If you believe there is an issue after checking the policy, you should contact your insurer and explain your concerns and discuss what can be done to resolve the dispute. Often, a satisfactory conclusion can be reached simply by speaking to the insurer and discussing the issue.
3. Put in a complaint with your insurer. If you're unhappy with the resolution after speaking with your insurer, you will need to go through your insurers dispute resolution process. This generally requires putting your complaint in writing. Your insurer will give you a timeframe of when this issue should be resolved.
4. If all else fails: Australian Financial Complaints Authority. If you have gone through the dispute resolution process and you are still not satisfied with the outcome, you should contact the Australian Financial Complaints Authority (AFCA) or in the past, the Financial Ombudsman Service (FOS). Escalating your dispute may mean that you have to wait even longer for a resolution but if you have exhausted other avenues, this may be the route to take in order to get the dispute resolved once and for all.

Pre-existing medical conditions and life insurance disputes

A common cause of life insurance disputes revolves around pre-existing medical conditions. Each year, the AFCA is contacted by hundreds of cases of people following their income protection claim being rejected. Life insurers have typically rejected claims due to policyholders not informing them of pre-existing medical conditions related to their claim.

So, it's super important to disclose all known information to insurers before signing the life insurance contract. Many applicants will withhold details of pre-existing conditions or lifestyle habits in an attempt to save on their policy premiums. As part of the duty of disclosure in the contract, it is the individual's responsibility to state all information to the insurer to avoid this situation from happening.

Definition of a pre-existing medical condition

A pre-existing medical condition is commonly recognised as any condition:

• That was previously diagnosed or investigated
• Where there were symptoms that lead to the diagnosis prior to application
• Or event that lead to the claim occurring took place
• Prior to the official commencement date of the policy or the effective date of any increase of the policy sum-insured.

Life insurance claims and taxes

A life insurance benefit payout is not taxable at the time of a claim if the nominated beneficiaries are financially dependent on you. These generally include:

• Spouse/partner;
• Child/children under the age of 18;
• Other financial dependents, such as siblings or ageing parents.

If you have nominated specific individuals as the benefactor of your life insurance policy and they are not financially dependent on you, there may be some tax implications and we'd encourage you to speak with a tax specialist.

Read more about life insurance tax deductions.

Your frequently asked questions answered

• How long does it take for a life insurance claim to be processed?

  It usually takes up to a few weeks to process a straightforward claim. However, it may take a number of months to process claims that are more complex.

• How is the claim paid?

  Usually by cheque or direct credit to your nominated account.

• When will I receive the payout from my claim?

  Once your claim has been accepted, you will usually receive your payout immediately after.

• Why do I need certified copies of my documents when making a life insurance claim?

  Certified copies of your documents are required to show that the copy is true and unaltered copy of the original. Your original documents and copies must be sighted and signed by a registered official, such as Justice of the Peace, Notary Public, Solicitor, or Commissioner of Affidavits.

• Why is the original policy document required?

  The policy document and policy schedule are required to show proof that the policy ownership has not been transferred to a different entity.

• What if I've lost the policy document and policy schedule?

  Your claim can still be processed; however, under the current legislation, insurance providers are required to advertise the loss of a policy with a 10-day waiting period until a replacement policy can be issued. A fee for processing a new policy may be applicable.

• Who should I contact if I need more information regarding my life insurance claim?

  Speak to your insurance adviser (if applicable) or with your dedicated claims officer, who will have been assigned to your claim.

• What can I do if I think my life insurance claim is taking longer than it should?

  Life insurance claims can be very complex, and can take weeks, months or even years to process. A claim might take longer to be paid if:

  • It is not immediately clear whether the medical circumstances of the incident are within the scope of the policy. For example, if it's not clear whether or not an injury was self-inflicted or accidental.
  • If the claimable event occurred overseas
  • If other investigation is needed prior to paying a claim.

  Often, there is little a beneficiary can do to speed up the process.

  • Insurers will often contact beneficiaries if they need more information to process a claim. It can be a good idea to make sure you're readily available, and that the insurer knows how to contact you.
  • You might contact the insurer and make sure you've provided all the information needed, and that it isn't waiting for anything else from you.
  • If it's a more complex claim, insurers will generally provide an estimate of how long it will take. If it takes longer than this you can contact the insurer and request an update.

• What about if I want to take a complaint a step further?

  Unfortunately, in some circumstances a claim might take years to be finalised. If it's taken an exceptionally long time, and the insurer hasn't provided any indication of how much longer it will take, you might lodge a written complaint to the insurer, and can expect a response.

  If you still don't receive any updates, and it's taking an excessively long time, you might escalate with a complaint to the Financial Services Ombudsman. Note that doing so might actually lead to a claim being paid later than it would have otherwise. A final option is to contact a lawyer to make enquiries on your behalf. Generally this isn't preferable, as you will need to pay any legal fees incurred.

  Generally, the right thing to do is to wait and stay in touch with the insurer. It's not unusual for claims to take years before they are finalised.