How to make a life insurance claim

It can be difficult dealing with all the paperwork when a loved one passes away. But a payout from a life insurance policy can help you with any financial worries you may have.

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We’ve put together a simple checklist to guide you through the process of making a claim on a life insurance policy when a loved one passes away.

1. Contact the life insurance company

The first step is to contact the life insurer to tell them you are making a claim. They have sympathetic and helpful staff who are used to dealing with people who are bereaved so the process is fairly quick and uncomplicated.

If you can’t find the policy but know the name of the company, call them with everything you know. 

If you don’t know who the insurance is with, or the company has changed name, don’t panic. You can ring the Association of British Insurers instead who will help you track it down.

2. Get the paperwork in order

Along with the claim form, you’ll need to send in a number of documents. The most important one is the death certificate that shows the cause of death.

Insurers need the original document, so ask for several certified copies from the funeral company. Enclose your policy document if you have it and send them all by registered post or recorded delivery.

3. Fill in the form correctly

To speed up the claim, make sure the claim form is filled in correctly. If you have any doubts or questions, don’t be afraid to give the insurer a ring and ask for help while you’re completing it.

The insurer should also stop taking premiums on the policy and repay any paid since the date of death.

4. Receive your payout

As long as everything is in order, the insurer should pay out the claim in a matter of days and certainly not more than a handful of weeks. Who is paid can be more complicated, however.

It’s simplest if the policy was written in trust. In this case, the insurer will pay the person named as the beneficiary on the document directly. The sum paid out doesn’t have to be included in the legal documents sent for probate and it won’t be liable for inheritance tax.

If the life insurance policy wasn’t written in trust, it will be paid to the executors of the deceased’s estate. They will handle the administration, known as probate in England and Wales and confirmation in Scotland.

Until probate is granted, no money or gifts can be paid out to those named in the will. On average, this can take six months. If it takes longer than two months, the money will earn interest.

If there isn’t a will, the life insurance along with all other assets will be paid out according the rules of intestacy. Unfortunately, this can take a long time to sort out.  

Without a will, the insurance payout will become part of the estate which includes investments, savings, homes and anything of any worth. Everything has to be valued before probate will be granted and inheritance tax (IHT) paid on it if it’s due. The first £325,000 is tax free, after that IHT is charged at 40% on everything else.

Anything given to a husband, wife or civil partner is exempt from IHT. If your spouse or partner has already passed away and they gave everything to you, then you have their IHT allowance to use too, meaning your estate can be worth twice the limit (so, £650,000) before IHT will be charged.

5. If there are problems

In most cases, making a life insurance claim should go relatively smoothly. But sometimes there can be problems. For instance, a claim can be refused if the person taking out the policy was a smoker and neglected to say so – or if they weren’t honest about their medical history.

If you don’t agree with the insurer’s reason for turning down a claim, you can appeal to the Financial Ombudsman Service who will decide who is in the right. 

You can read more about preparing for bereavement in our article.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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