Life insurance claims

Learn the 3 key stages involved in making a life insurance claim, to help the process go more smoothly during a difficult time.

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Making a life insurance claim is an important process for policyholders and beneficiaries to get to grips with. Whether you're about to make a claim, or are making sure your next of kin is familiar with the process, here are the simple steps to keep in mind.

What you need to know

  • You need to find details of the life insurance policy in order to make a claim.
  • Get in touch with the relevant insurance provider, and complete any claim form as required.
  • Generally insurers have a claims process in place that is fast and uncomplicated in some cases.

Making a life insurance claim: Step-by-step

If you need to lodge a life insurance claim, you'll usually need to follow these steps:

Number 1

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.

Number 2

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.

Number 3

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

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 held within 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
Hannover Re89.70%1.18.310.70%
Industry Average88.00%3.315.715.20%
St Andrews85.50%2.3022.60%
Swiss Re90.90%

*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
Industry Average96.30%3.1716.00%

* 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
Hannover Re97.60%0.91.1
Industry Average98.20%1.30.8

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.

What to keep in mind if you're a life insurance claimant

Here are some key considerations into account when making a life insurance 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.

Steps to take to sort out life insurance disputes

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.

Frequently asked questions about life insurance claims

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