How Long Does a Life Insurance Claim Take? 

What is life insurance? 

In the aftermath of a loved one passing away, families are sometimes left dealing with a financial burden as well as an emotional one. While grief is never easy, a life insurance payment can provide some relief when it comes to day-to-day expenses. Generally, life insurance pays out in a lump sum and is intended to help with expenses like mortgage or rent payments, funeral costs and any outstanding debts.  

The term ‘life Insurance’ not only refers to both the specific type of life insurance product that is paid out after death, but is also used as an umbrella term for a number of different insurance products, including payment after death, payment after total and permanent disability, income protection insurance and trauma cover.  

In this article, we’ll focus on life insurance that pays out after the person who took out the policy has passed away, policy holder’s death, and explain how it works. This type of life insurance is also known as life cover and is sometimes even referred to as ‘death cover’.   

Types of death cover insurance benefits 

While it’s never pleasant to think about what would happen to your loved ones in the event of your passing, it’s important to carefully weigh up different life cover policies that insurers offer and consider the different benefits, features and exclusions. Common features include: 

• Terminal illness benefit: This option means your policy will pay out if you’re diagnosed with a terminal illness and generally have less than 12 months to live
• Funeral advancement benefit: This provides a prompt initial payment to help your family cover immediate funeral expenses
• Pause payments and cover benefit: This allows the policy holder to briefly and temporarily pause payments in cases of financial hardship
• Inflation/automatic indexation benefit: This means that your premium will continue to increase each year in accordance with inflation, requiring payment of adjusted premiums
• Premium freeze benefit: This means that the premium does not increase over time, but the lump sum that the beneficiaries will receive goes down instead 

When is your life insurance (or life cover) paid out? 

Life insurance policies aren’t just paid out automatically. In the event of your passing, it will be up to your beneficiary to contact the insurer to notify them of your death, or terminal illness, to get the claims process started.  

While each insurer has its own process of handling life insurance claims, most understand the stress that comes with these types of situations and endeavour to provide a smooth, stress-free claims process. 

Typical duration of death benefits payments 

Embarking on a life insurance claim can be an emotionally challenging journey, especially when dealing with financial uncertainty while grieving the loss of a family member. The time taken to prepare and process a claim can be disheartening, but there is information available for those attempting to negotiate the complexities of the insurance system.  

According to recent (APRA) data, almost three-quarters of death cover claims are processed within two weeks.  

Source: APRA Life insurance claims and disputes statistics – June 2022 page 8

Helpful Tip:

Look for a life insurer who is a member of the Council of Australian Life Insurers (CALI).  All members must comply with the Life Insurance Code of Practice, which is a series of mandatory customer service standards designed to make life insurance simpler for customers.

Eliza Ryan

Senior Marketing and Growth Channels Manager, Lifebroker

How to file a life insurance claim 

Following a loved one’s passing, there are a few key things that need to happen before their Life Insurance policy can be paid out.  While the exact process may change depending on the insurer, here are the main steps a beneficiary will typically need to take to ensure the policy is paid out as soon as possible. 

1. Contact your insurer 

The first step in the claims process is to contact the insurer. Depending on what insurer your loved one purchased the insurance policy through, you may need to contact the insurer directly, an insurance broker or financial adviser, the superannuation provider or an employer. ` 

When you contact the insurer, ask them to explain how the claims process works, what information you’ll need to provide and what forms you’ll need to complete. It can also be worth making note of who you’ve spoken with in case you need to refer back to it in the future. 

If you’re struggling, you can ask a trusted friend or family member to help you with the claims process. 

2. Gather supporting information 

The insurer will typically ask for relevant information to support your claim, so it can help to gather the necessary documents and information ahead of time. If you’re not sure what you may need, your insurer will help you with this process. 

3. Complete required paperwork 

Most insurers will provide you with a claims form to complete once you’ve notified them of your loved one’s death, injury or illness. It’s important to pay close attention to the documentation to ensure you fill it out correctly. Incomplete or incorrect forms can lead to delays in the claims process. 

4. Follow up on your claim 

Once you’ve submitted the claim, it’s important to be proactive throughout the assessment process. Be sure to respond to their requests in a timely manner and provide any additional information as quickly as possible. 

The insurer will keep in regular contact with you about your claim and will work with you throughout the claims process. Of course, you can reach out to the claims department for any enquiries related to an ongoing claim. 

Are there time limits for life insurance payouts? 

1. While recent APRA figures show that 71% of death cover claims are processed within two weeks, there are specific time limits that insurers must comply with. Under the Life Insurance Code of Practice the timeframe for making a decision depends on the circumstances of the claim. Generally, you should receive an outcome within the following timeframe:
2. Life insurance Claims (where you receive a once-off payment): within six months of the claimed received date, or six months after the waiting period has expired 

If the insurer doesn’t meet these standards or you’re unhappy with their service, you can lodge a complaint directly with them. 

Benefits of life insurance payouts 

Aside from the payout itself, Life Insurance can provide a range of additional benefits for both you and your family. Some of the main advantages of Life Insurance include:  

• Continued coverage: So long as your premiums are paid, life insurance policies often provide ongoing protection to you and your beneficiaries
• Income protection: Life insurance payouts can replace lost income, helping families maintain their standard of living and cover daily expenses after the death, illness or injury of the primary breadwinner
• Peace of mind: Knowing you have a financial safety net in place can alleviate stress so you can focus on enjoying life with your loved ones without having to worry about the future 

Considering purchasing life insurance? 

At iSelect, we’ve partnered with Lifebroker to help you easily compare life Insurance policies online.  

Before you take out a life insurance policy, be sure to check the Product Disclosure Statement (PDS) to understand the specific coverage, exclusions and limitations listed.