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Private life insurance policies
The person who died may have taken out life insurance themselves. There are several main types of private life insurance. "Term" life insurance pays out only if the person dies during a fixed term (eg five or 10 years). "Whole-of-life" life insurance pays out whenever the person dies.
Some people have an endowment policy. This is an investment product that you buy from a life assurance company which includes life insurance. At the end of a set period it pays a lump sum. If the person dies before the end of the set period, the endowment policy company will pay a lump sum.
With all types of life insurance, if the person who died didn’t keep up with payments, the scheme may not pay out.
How to claim from a private life insurance scheme
Insurance companies are used to dealing with life insurance claims so the process can be quite straightforward.
Let the insurer know you plan to make a claim. The quickest way to do this is by phone. The number should be in the policy documents or you can find it online. You can also contact the insurer by email or post. They will tell you what you need to do to claim.
If you can’t find the policy document, you might not know which insurance provider you need to contact. You can try checking the person’s bank and credit card statements for any regular payments to insurers or an insurance broker.
Sometimes insurance companies merge or change their names. The Association of British Insurers recommends the Policy Detective website to help find missing policies.
The insurer is likely to need to know:
the name of the person who had the policy
the date and cause of death (as stated on the death certificate)
the policy number (if you have it)
your name and contact details
your relationship to the person who’s died.
The insurer will send you a claim form and tell you what information and documents you need to send them. They will want to see the original death certificate. So you may find it useful to get several copies when you register the death. They may also ask for the person’s birth certificate, or some other proof of their age.
Once the insurer has agreed to pay the claim, payment can be made. The insurer should also repay any payments into the scheme since the person died.
They may ask you to sign a declaration that you will pay back any money you’re not entitled to.
Is the life insurance policy held in trust?
The life insurance policy might have been "written in trust". The insurance company can tell you if it was. If it was, the insurance money doesn’t count as part of the person’s estate (everything they owned at the time of death). So the money can come directly to the person it’s left to (the beneficiary). You don't have to wait for probate (the legal process for dealing with the estate of someone who’s died) and there is no inheritance tax to pay.
If the life insurance policy wasn't written in trust, the money will form part of the estate and may be taxed. The people administrating the estate (called "executors") will handle the claim and pass the money on to you. These people are named in the Will of the person who died. It typically takes around six months but can be longer.
Life cover through an employer
If the person who died was still employed, they might have had life insurance through their employer (sometimes called "death in service" benefit). You’ll need to tell the employer the person has died.
The person who died will have filled in an "expression of wish" form. This says who they wanted to have the money (the beneficiaries).
Top 10 life insurance companies
The exact way in which the money is paid to the beneficiary depends on the policy. It may be paid as a lump sum or as a regular income. If it’s paid as a regular income, it may be limited to a certain number of years. You’ll usually have to pay tax on income from an employer’s scheme, but you don’t usually have to pay tax if you get a lump sum.
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Published date: 1 April 2018
Review date: 31 March 2019
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