Life insurance claims

Find out the steps to take and what documents are needed if you're in charge of making a life insurance claim.

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Making a claim is an important process that both policyholders and beneficiaries of a life insurance policy should understand. Whether you are about to make a claim or are making sure that your next of kin is familiar with the claims process, here are some simple steps to keep in mind.

Making a life insurance claim: A brief summary

  1. Notify your insurer or your life insurance adviser. This is where your insurer will let you know what types of forms and documentation is required.
  2. Your claim is assessed. Once you provide whats needed, your claim will be assessed. Some insurers will have a dedicated claims assessor to keep you updated and ask for any additional details.
  3. Get to an outcome. You'll either receive a payment or the claim may be disputed e.g. the insurer may not be satisfied with the evidence of your claim.

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

Steps to a successful claim

Life Insurance Claims Process Diagram

Key tips for life insurance claimants

Making a claim on a life insurance policy is not necessarily a complicated procedure, but it can be time consuming. Bear in mind that the claims procedure may differ from one provider to another. However, you can manage this process more efficiently by taking some key considerations into account when making a life insurance claim.

These include:

  • Check the life insurance policy documentation. Life insurance policies and procedures can vary between providers, so before you do anything else relating to the life insurance plan, you need to check the policy document carefully. This is to make sure that you are aware of the process that you need to go through and that you have all of the relevant information that the provider is likely to ask for on hand.
  • 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. Because life insurance claims can take a considerable amount of time to process, it is all too easy to forget details that may prove important later on during the claim process. 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. The insurer will require different types of documentation and they are normally specified in the policy, but you can also contact the provider for verification. This can include things such as a copy of the death certificate and details about the policyholder’s doctor/surgeon.

Life insurance claim stats

ASIC tracks the claims related disputes performance for Australian insurers. The tables below show claims and related dispute information for death cover bought directly from insurers, through advisers and through a superannuation fund between 1 January 2018 and 31 December 2018.

InsurerClaims accepted rateAverage claim time (months)Disputes per 100,000 lives insuredPolicy cancellation rate
AIA***21.00%
AMP***17.50%
Allianz***13.10%
ClearView97.70%2.43.816.60%
CommInsure93.30%4.122.214.20%
HCF***12.70%
Hallmark***32.10%
Hannover Re89.70%1.18.310.70%
Industry Average88.00%3.315.715.20%
MLC***16.00%
MetLife***14.20%
NobleOak***9.60%
OnePath94.50%5.466.618.00%
St Andrews85.50%2.3022.60%
Suncorp/Asteron88.00%3.629.417.20%
Swiss Re90.90%3.11.59.30%
TAL72.80%3.118.924.50%
Westpac94.60%3.18.313.30%
Zurich94.30%2.414.116.60%

*The number of finalised claims is too small to provide a reliable result.

InsurerClaims accepted rateAverage claim time (months)Disputes per 100,000 lives insuredPolicy cancellation rate
AIA97.40%2.39.415.20%
AMP97.50%5.4717.00%
ClearView***15.20%
CommInsure88.50%2.111.514.80%
Hallmark***19.40%
Industry Average96.30%3.1716.00%
MLC97.90%2.4618.00%
MetLife***25.60%
NobleOak***4.70%
OnePath96.50%4.35.616.70%
QBE/Integrity***0.00%
Suncorp/Asteron97.20%1.98.815.10%
TAL98.40%0.99.213.50%
Westpac95.00%2.22.615.20%
Zurich96.30%1.45.814.30%

* The number of finalised claims is too small to provide a reliable result.

InsurerClaims accepted rateAverage claim time (months)Disputes per 100,000 lives insured
AIA98.50%0.81
AMP99.90%8.40.4
CommInsure96.50%1.30.8
Hannover Re97.60%0.91.1
Industry Average98.20%1.30.8
MLC99.10%0.70.4
MetLife99.60%0.80.4
OnePath97.10%1.21.6
QInsure93.50%1.71.5
Suncorp/Asteron94.00%10
TAL98.50%0.80.7
Westpac98.40%1.60.5

Note: The policy cancellation rate is not shown for the superannuation fund sales channel as changes are mainly due to superannuation trustees changing the insurer of the fund.

Some quick-fire questions you might have about submitting a claim

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 longer to process claims that are more complex in nature.

How is the claim paid?

Usually by cheque or direct credit to your nominated account.

When will I receive the payout from claim?

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

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 and/or your dedicated claims officer.

What do I do if a 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, a high case load or claims means a complex 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.

Steps to take to sort out life insurance disputes

It's crucial to familiarise yourself with the steps that you should take in the event of insurance disputes, as this will enable you to act more decisively and use your time wisely on the proper course of action in the event that you have a dispute that needs to be addressed. In the event of a complaint or dispute you should look at taking the following steps:

  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. The life insurance company has usually rejected the claim due to the policyholder not letting them know about a pre-existing medical condition related to their claim. These cases highlight the sheer importance of disclosing all known information to insurers before signing the contract of insurance. Many applicants will withhold details of pre-existing conditions or lifestyle habit in an attempt to save on their policy premiums. As part of the insureds duty of disclosure, it is their responsibility to state all known information regarding pre-existing medical conditions to their insurer to avoid this situation occurring.

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.

What are the requirements of the life insured under the duty of disclosure?

Under the insurance contract act of 1984, each applicant is required to state every matter that they know, or would be expected to know that is relevant to the insureds decision to provide cover and at what rate. Each applicant will be required to answer questions during the application regarding their health, occupation and lifestyle. It is safer to contact your insurer to discuss any matter that you are unsure about disclosing during the policy application to avoid any surprises at claim time.

Life Insurance Claims and Taxes

It is important to remember that 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/ren 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 whether or not life insurance is tax deductible.

Be prepared and save time when claiming life insurance

At a time of grief the last thing that most people want to be doing is getting stressed about making a life insurance claim. At the same time, for many people this is a necessity that needs to be sorted out as quickly as possible to avoid financial hardship in the short-term.

Being prepared can save a lot of time when it comes to making a claim on a life insurance policy. This preparation can mean everything from going through the claim procedure with the policyholder when the policy is first taken out to ensuring that you always know where you keep the policy documents in case you ever need to get hold of them and the policyholder is no longer around. Simple things like these can help you to save time and hassle when it comes to actually making a claim on a life insurance policy making it easier to cope with the loss of a loved one.

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