Life insurance is an essential financial tool that pays out a sum of money or death benefit to your beneficiaries to help cover their expenses and compensate for lost future income. Over 70% of Canadians have some type of life insurance policy to help provide peace of mind and financial security for loved ones.
It can take anywhere from 10 to 60 days to receive a life insurance payout after a claim has been submitted. The claim processing time varies depending on how and when the insured died and whether the right documentation has been submitted. If everything checks out a claim can often be issued in under two weeks, however, if there are complications the claim process can take two months or even more.
So, what can you do to ensure there are no delays or issues when your beneficiaries claim life insurance after your passing? To get the answer to this question and a lot more, read on!
Understanding Life Insurance Claims
What are life insurance claims? In layman’s terms, a life insurance claim is a process whereby a designated beneficiary on a life insurance policy formally requests an insurance provider to pay out the benefits attributed to them as stated in the policy.
There is no time period associated with filing a claim. A beneficiary can file for a claim even years after the insured’s death. As long as the insured dies while the policy is active the beneficiary will receive the payout regardless of when they apply for it. However, it goes without saying that the sooner you file for a claim the sooner you will receive the benefit payout.
How To Start A Life Insurance Claim Process?
Claiming a life insurance benefit is a fairly straightforward process in Canada. Here are the steps involved when filing for a life insurance claim:
- Provide proof that the insured is deceased. This is usually presented in the form of a death certificate that identifies the exact time, date, location, and cause of death. In certain cases, more proof may be warranted in which case you may also have to provide one additional document for proof. This can include an obituary, funeral home bill, funeral director’s statement, coroner’s report, or police or medical records.
- Fill out the claim forms and attach the original life insurance policy document if you have it on hand. When filling out the forms also make sure the information you provide is accurate and relevant. This can help speed up the claim process. (If you can’t find the original document you can request the insurance provider to send you a digital copy instead)
- Choose how you would like the death benefits to be paid out. You can either choose to receive a lump-sum payment or opt to be paid out in the form of an annuity. In the case of an annuity, beneficiaries are paid annual payments for a predetermined number of years or life depending on the terms of the policy and the insurance provider.
- Submit all documentation and claim forms. Wait for the insurance provider to review and cross-check the information and fact-check the claim request. This can take anywhere from two weeks to two months.
- Once the claim is approved the beneficiary will receive the payout according to the payment method they had specified. However, if the claim is denied the beneficiary can write an appeal letter, speak directly with a designated representative, or consider legal recourse if they feel the denial was unjust or unwarranted.
How Long Does The Life Insurance Claim Process Take?
The life insurance claim process can take several weeks. It can take a few days for a beneficiary to fill out the necessary claim forms and gather the relevant documentation needed for submission. After submission, the insurance provider can take a further two weeks or more to cross-reference everything and issue the payout.
In most cases then, it can take a minimum of three weeks to a month for you to be paid out and this is why it is essential to initiate claim proceedings as soon as possible.
What Factors Can Delay The Claims Process?
Several factors can delay the claim process which can make things quite stressful and financially tasking on beneficiaries. Here are some of the most common reasons for delays that can be easily avoided:
- The submission of incorrect or vague information and wrong documentation is the most common reason for delays. This can be easily avoided by double-checking all the paperwork and ensuring that the directions provided by the insurance company are followed to the tee.
- Any missing paperwork can also cause delays. If even one form or document is missing it can cause delays in the claim process.
- If the death has occurred during the contestability period there is likely going to be a delay in the beneficiary receiving a payout. The contestability period is a two-year window from the date of issue of a life insurance policy whereby an insurance provider can legally withhold the payout to a beneficiary until it has done its due diligence confirming there is no form of misrepresentation or insurance fraud involved.
- Another reason why an insurance claim can be delayed is based on how the insured has died. If the insured was murdered, or died while engaged in any form of illegal activity the insurance provider can withhold the death benefit payment until a thorough investigation is conducted.
What If A Claim Is Denied?
If a claim is denied, the insurance provider has to legally provide a written explanation underlying the reasons behind the denial. If the beneficiary feels that the reasons aren’t valid, unjustified, and unwarranted they can appeal the decision and even take the insurance provider to court.
The Importance Of Consulting With Insurance Experts!
When filing for a life insurance claim it is always best to consult with an insurance agent, brokerage company, or the insurance provider themselves as they can assist you in ensuring that you follow the steps required to receive your insurance benefit without any delays or setbacks.
At McIver Insurance we specialize in all types of life insurance policies and are the most trusted insurance brokerage firm in the Atlantic Provinces. To learn more about life insurance or its claim process feel free to call us now at 1-902-220-3279 or email [email protected]