How to claim on a life insurance policy

Life insurance pays out a lump sum of money when a person dies. It can be used for anything including mortgage costs, childcare fees, or general household bills. The money is designed to support the person’s dependents and to help them financially at an upsetting time. It can replace the lost income and provide a buffer to help surviving family members.

How to find out if there is a life insurance policy

If the person who has died has not told you about a life insurance policy, you will need to do a little digging into their paperwork to find out if they have one.

A life insurance policy may be named in a will, but if not have a look through their paperwork. There may be a statement from a life insurer or a regular payment made to it. 

You should be able to see from a current account statement where regular payments are going. If you find something that looks like an insurance payment, contact the company in question to confirm a policy exists. If so, you are then ready to start an insurance claim.

Who can claim?

Anyone can start a life insurance claim. This does not make you entitled to the payout though unless the policy names you as a beneficiary.

Usually, those closest to the deceased deal with any financial matters. If there are no family members and you are a close friend, you could start the claim on their behalf.

To start the claim, find out which company holds the life insurance policy, then contact the insurer.

Is there a time limit?

Life insurance companies do not outline a timescale, so you can start a claim after a few weeks or more if you need the time to grieve.

When you call to make a claim, the insurer will have trained staff to deal with your situation sympathetically, making it easier to start a claim soon after the death.

What do you need to claim?

Most insurance companies will ask for the following:

• The name of the deceased person

• The cause of death (find this on the back of the death certificate)

• The life insurance policy number

• Who you are, and your relationship to the deceased

• Your contact details

The insurer will send out a claim form for you to complete, either online or through the post, and a list of all documents it needs you to send to process the claim, e.g. a copy of the death certificate.

Who gets the payout?

This depends on a few different factors:

• If the policy was set up in trust: The payout will go to a nominated person named on the policy. This may not be a family member.

• If the policy was not set up in trust: This is how most policies are set up; the payout will go to the deceased person's estate, making it liable for inheritance tax.

When you set up a life insurance policy you will be asked to name beneficiaries who will receive the money if you die. This is usually close family members or friends.

If the life insurance policy was in joint names, or the spouse/civil partner of the deceased is still alive, they will get the payout.

Who gets the payout if the beneficiary is also deceased?

In some cases, the beneficiary of a life insurance policy will have died. If this has happened the money will usually go towards the deceased person's estate.

If there is no will in place, the estate usually passes to the spouse or civil partner.

If there is a will, it will specify who gets what from the deceased person's estate.

What if the insurer rejects your claim?

Life insurance claims are usually accepted and paid. However, if a claim is rejected you can ask the insurer why. The following are the most common reasons why an insurer may reject a claim: 

• Issues with non-disclosure: This is when the policyholder has not given an honest account for their medical history or family's medical history.

• The policy had already ended: If the policyholder had a term life insurance, it would only have lasted a set duration, e.g. 30 years. If the policy term has already ended, you cannot claim.

• You have not given the insurer everything they need: The insurer will be clear in what information and documents it needs to process your claim. If you cannot provide them with everything they need, they could reject the claim.

If you think the insurer rejected your claim unfairly, you can complain directly to it. If you’re not happy with its answer, you can then contact the Financial Ombudsman. It can look into your complaint, for free, and make a ruling on it.