Making a Claim

What happens at time of Claim?

A topic that does not receive a great deal of discussion is what happens at the time a claim is made on a life insurance policy. Upon the death of a life insured, the policy owner, his/her executor or his/her personal representative should contact the servicing agent of the policy, or if this is not known, the insurance company directly. 

At a minimum, the insurance company will require that a signed death claim form along with an original copy of the death certificate be submitted. Some companies will require names of the attending physician and the deceased health card number. Each company may have its own specific documents that will need to be filed.

If the death occurs in the first 5 years of the policy, more detailed information will be required. The agent who sold the policy may be required to submit a form providing details surrounding the sale of the policy. The company will no doubt review the circumstances surrounding the death, to ensure no fraudulent information was provided at the time of the application.

Once the claim form and the supporting information have been approved by the insurance company, the death benefit is paid to the named beneficiary. Assuming there are no reasons to delay the claim, this process takes between 5 and 10 business days. Interest is paid on the death benefit from the date of death to the time when the claim is approved. No premiums are payable from the date of death.

What issues might arise to potentially deny a claim

It is important to note that very few life insurance claims are questioned or challenged. Aside from a claim which questions whether in fact the person has truly died, the most common issue in respect of claims being challenged by the insurance company, is fraudulent misrepresentation at time of application. 

There is a difference in fraudulent misrepresentation and a misrepresentation that was as a result of a mistake. This difference has a significant body of law associated with it and this guide is not the forum to provide an exhaustive analysis of the differences. However, in general terms, fraudulent misrepresentation will have occurred when an applicant for insurance knowingly withheld material information from the insurance company that would have resulted in a different underwriting decision. The best example of this is making a claim of being a non-smoker when in fact the person had smoked within 12 months of the time of applying for insurance.

All insurance policies have what is known as a suicide clause. This means that the insurance company is not required to pay a claim arising from a suicide that occurs within the first two years of the policy.

The best advice that can be given to anyone applying for insurance is to provide full and complete information of all medical and lifestyle issues, as requested by the company or their representative.