Making an Insurance Claim: The Claims Process Explained

Lodging a life insurance claim typically involves several steps. First, you’ll need to contact your insurer. A consultant will record your call and inform you of the process and paperwork required. After that, you need to provide the insurer with the completed claim forms (select insurers may complete this over the phone) and any other documentation they may request. Your claim will get reviewed by the company’s life insurance claims assessor, after which it will be accepted, denied or further information asked.

Life Insurance Direct are the experts you want supporting you throughout the claims process. With over 11 years of experience in lodging claims and dealing with life insurance companies, we’ll assist you (our clients) wherever you need help.

Understanding the life insurance claims process

The process of making an insurance claim is when you or your beneficiary(s) formally request a life insurance company to provide the benefits covered in your policy. Insurance claims can usually include death or terminal illness benefits on life insurance, accident or illness benefits for TPD, trauma cover or income protection insurance, depending on the type of cover you purchased.

6 Steps to claiming on life insurance

step-1Check the policy documents to determine if you are the insured or beneficiary of the policy.
Then, make sure you’re claiming for an eligible event as indicated in your PDS.

step-2Notify the insurer that you intend to lodge a claim; either by phone or in writing.
The life insurance company sends the claim forms & list of supporting documents required.

step-3Complete & send the claim forms and documentation to the insurer.
Include the GP or specialists forms in your claim file.

step-4The life insurance company assesses your claim and medical information provided against the information provided at the time of application.
Often an assessor will ask for additional information (medical reports, test results & clarification of information provided).

step-5The claim is either accepted, denied or deemed invalid.

step-6If approved, payment is usually made by cheque or direct credit.

How to claim life insurance benefits?

To claim life insurance benefits, there must first be a claimable event as defined in your policy documents. The beneficiary should then contact the insurance company and submit the fully completed claim forms and additional supporting information, for example, a certified copy of the insured person’s death certificate. The Insurer will then review your claim and contact you as needed during the process.

When can you claim life insurance?

You can generally claim on a life insurance policy when you’ve experienced one of the events or circumstances listed in your product disclosure statement (PDS).

Who can claim life insurance?

For a death benefit, the beneficiary(s) listed on the insured person’s policy documents will generally need to lodge the claim. However, if no beneficiaries are listed the insurance company will usually pay the benefits to the policy owner, as they are deceased, which will then generally pass to the estate. In such circumstance, it will generally be the executor of the estate who lodges the claim.

Concerning TPD, trauma cover or income protection insurance, the person insured on the policy is generally the best person to contact the insurer to lodge the claim.

How long does it take for an insurance company to pay out claims?

Life insurance companies in Australia are generally expected to pay promptly after the claims assessment has yielded a satisfactory outcome. However, it is typically a delay in the provision of the completed claims forms (and supporting evidence) that causes delays. The evaluation of complex claims can also result in a delay.

Generally, a life insurance policy will include a funeral advancement benefit, either as a built-in or optional feature. This benefit will then pay the nominated beneficiaries an advancement on the life insurance lump sum, usually within 10 to 14 working days, depending on the insurer.

Take note; for a funeral advancement benefit to be paid, a death certificate or a report from the treating doctor is generally required, along with the fully completed claim forms.

Payment for the full life insurance benefit will generally be dependent on you getting the completed claim forms and documents to the insurer and their final assessment of your whole claim.

How to make a life insurance claim: The documents and forms

To make a successful life insurance claim, get your facts straight first. Make sure you know what you’re claiming for; the specific event and the cover amount listed in the PDS. When contacting the Insurer, have your policy number ready. The claims consultant will organise your claim forms to be sent to you and will ask you to provide additional information and supporting documentation, including:

  • The original policy document and schedule to show proof that policy ownership was not transferred to a different person or entity.
  • Certified copies of the death certificate for a life insurance claim. Waiting for a death certificate could take some time. You might want to complete the claim forms and lodge your claim, while you wait for the death certificate.
  • Medicare and Pharmaceutical Benefits Schedule (PBS) form. Only include dates from when you were born until your policy inception.
  • A treating doctors report: The treating doctor (or the doctor you consulted) needs to complete this form for you (Income Protection, TPD or Critical Illness claims), along with relevant test results and reports.
  • Financial evidence of your income, in case of an income protection claim, if you have not yet provided it. For example, your pay slips, group certificates or tax returns and tax assessments. If you are self-employed, you’ll also need to submit your business tax returns and profit and loss statements.

Benefits of being a customer of Life Insurance Direct

If you need any assistance with your claim, whether you have a question about filling in the first form or wondering if your claim is being handled correctly, call us. Customers have direct access to our claims support service.

You can contact our specialists at any time during the claims process; for life insurance, TPD, trauma and income protection. We are here to help support you and your beneficiaries to get your claim paid as adequately as possible.

Upon your request, we will review your claim forms and documents before you submit them to the life insurance company. Often the context of a question might be unclear, in which case we’ll help you understand why the question is relevant.

Call us to cut down your insurance claim time

Cut your insurance claim time by calling us and requesting assistance from the claims support team. They are all fully trained and sensitive to people undergoing the process. Make sure you have the policy number and other details of the event (death, accident or illness) ready before calling.

Life insurance claims statistics in Australia

The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investment Commission (ASIC) are in the process of implementing a transparent public reporting regime, wherein Australian life insurance companies must publicly report their claims data on a yearly or bi-yearly basis.

There is also a reported discrepancy between claims paid for Retail Life Insurance vs Direct Life Insurance and Group Life Insurance. According to the ASIC 498 report (2016), claims from Non-Advised policies (purchased directly) had a 71% higher chance of being declined than Advised (retail) policies and Group policies had a 14% increased chance of being rejected.

The percentage of claims paid are generally higher for Retail (advised) policies compared to Direct (non-advised) or group policies, as indicated in the table below.

Life insurance claims statistics 2017 (to 30 June)

Source: APRA and ASIC life claims statistics (1 January 2017 to 30 June 2017)
Claims Advised (Retail) Non-advised (Direct) Group
Death 98% 88% 98%
TPD 86% 67% 84%
Trauma 87% 84% -
Income Protection 95% 83% 96%

According to APRA and ASIC, in six months (1 Jan to 30 June 2017) over 70,000 claims were reported of which 93% were paid, and 7% declined.

Why do insurance companies deny claims?

Claim forms incorrectly filled out or missing documentation

While not resulting in a claim being denied, is usually the most common reason the claims process is delayed is due to incorrect claim forms and/or the life insurance claims assessor waiting for the relevant supporting documentation to be provided.

Failed to comply with your duty of disclosure

When relevant information was excluded during application time or inaccurate information was provided, your claim may be denied.

Before you enter into a contract of insurance, you are legally obliged (under the Insurance Contracts Act 1984) to disclose relevant information to the insurer before an agreement is entered, under the duty of disclosure.

If your policy is more than 3 years old, the process to check your duty of disclosure may not be required, and it will depend on your insurer whether they need to conduct any assessments.

Not meeting product terms and conditions

Your claim is typically declined when you do not meet the definition of a claimable event, for example submitting a trauma claim for a critical illness not listed in your PDS. Also, there might be specific exclusions on your policy which makes a particular claim irrelevant.

Your premiums are not up to date

This might sound obvious, but when beneficiaries lodge a death benefit claim on the insured person, they generally don’t know whether the person stopped or forgot to pay their premiums. Remember, life insurance is a legal contract, and if you don’t uphold your responsibilities, the company doesn’t have to either.

Suicide not covered

Depending on the insurance company, generally, suicide will not be covered during the first 13 of your policy commencing or all together depending on your policy terms and conditions.

Excluded events

Your policy might have an existing exclusion (refer to relevant PDS). For example, a pre-existing medical conditions, extreme sport or hobby, dangerous occupations or ‘self-inflicted injuries’, which will generally lead to a claim being denied

Life insurance claims questions and answers

Are life insurance claims taxed?

If claiming for a personally owned life insurance policy purchased outside of Super, your payout will usually be tax-free. Please read our guide to life insurance tax-deductibility for more information.

When should I start the claims process?

You always want to lodge a claim as soon as possible because collecting medical documents will generally be easier once you know you need them. For example, if you are unable to work due to a disability caused by accident and you’re seeing a specialist because of said disability, get those specialist reports immediately.

Rather lodge a claim immediately and then withdraw if you need to, rather than waiting and having to pay for the medical reports from doctors and specialists.

What happens when you withdraw your insurance claim?

When you withdraw a claim in progress, it will usually stop processing. Depending on the insurer, you’ll typically get a letter confirming your decision to withdraw the claim.

Is there a time limit to file an insurance claim?

Generally, there is no time limit on claiming a death benefit. If there was a life insurance policy in place and it was in force at the time of the insured person’s death, and the beneficiary(s) can produce a valid death certificate, the company will usually have to honour the contract.

Where do I send the paperwork?

You can send the completed claim forms and supporting documents directly to the insurer, or if you have any questions and want to use our claims support service, you send it to us.

When claiming, when will I stop paying premiums?

For a lump sum payout where the policy terminates, you’ll continue paying premiums while your claim is being processed and then, when the insurer pays your claim, they will generally back-pay all the premiums you paid since lodging the claim.

However, for an income protection claim you usually never stop paying your premiums. The insurer will usually add the premium to the monthly benefit they pay you, thus refunding your premium payment.

If you have a combined policy, for example, life and TPD, and the insurer only paid the TPD portion, you’ll generally continue to pay your set premium or a reduced version of your premium, depending on the structure of your policy.

How long does it take to get a check from the insurance company?

Once your insurer has received all the claim forms and relevant documentation your claim will be assessed. Assessment can take a few business days or weeks depending on whether the provided information prompts the need for additional information, like an independent medical exam for example.

Payment of an approved claim will be paid promptly to your nominated beneficiary’s bank account.

How much will I get paid and how do I know if I’ve been paid correctly?

First, review your latest renewal notice, which will generally be a good indicator of what you should get paid at the time of the sickness or accident that lead to your death, trauma or disability.

When it comes to income protection, depending on whether you have an Agreed Value or Indemnity Value benefit, you need to prove your income and that your financials reflect the sum insured. It’s essential that you know which paperwork to provide. Please contact our customer support service for assistance if you are a customer of ours.

Can a life insurance claim be denied?

Yes, a life insurance claim can be denied because of several factors, including non-disclosure, unpaid premiums, pre-existing medical conditions being excluded, other exclusions and the event not being covered in the policy documents.

What happens when my claim is denied?

When a claim is denied, the insurer will usually send the insured person or beneficiary a letter stating the declined status and reasons thereof. However, the reasons will usually include insurance terminology.

What can I do after a claim is denied?

If you are a customer of ours, contact us. If you’re not a customer, you might want to try the internal dispute resolution route of the relevant insurer. If that doesn’t work, you could go to the Financial Ombudsman Service (FOS). If you’re not happy with that outcome, you might want to seek legal advice.

However, before you dispute a declined claim, you need to be fully informed on the factual evidence, for example, the terms and conditions of your policy. You might want to seek the assistance of a specialist.

What is a claim settlement ratio in life insurance policies?

A claim settlement ratio usually refers to the total number of claims approved and paid by the insurance company. This number is generally calculated by dividing the total number of claims received by the total amount that was settled.

Published: July 5, 2018

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Ask an Expert?

6 Comments

  • HELEN | 29th, June, 2017

    please explain VARIABLE DISABLEMENT

    Reply
    • SPECIALIST
      Russell | 5th, July, 2017

      Hi Helen

      This is not a term I have heard of in the life insurance industry here in Australia. Can you confirm was it “Variable” disablement or may it have been “partial” or “total” disablement as these are very common terms in the industry that I can help you with?

  • Robyne | 25th, August, 2017

    How do I check on a policy using the policy number?

    Reply
    • SPECIALIST
      Russell | 1st, September, 2017

      Hi Robyne

      In general most life insurers won’t give the status of your claim online. It would be best to contact them directly to get an update on how the assessment is progressing.

  • Jonathan | 3rd, July, 2018

    How many years experience do your advisers have?

    Reply
    • SPECIALIST
      Anneke | 13th, July, 2018

      Hi Jonathan.

      We have been in operation since 2006, and our team’s experience is comprehensive with some of the more senior staff having 11+ years and others with lesser experience. However, we have dealt with a large number of claims over the years, therefore if you need assistance please reach out to the team on 1300 135 205.

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