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Claiming on a life insurance policy

Life insurance pays out a tax-free lump sum or income when someone dies. This money can then be used by whoever it’s left to for anything. It may be useful for things like mortgage or tax payments. If you’re included on someone’s life insurance policy and they die, you may be entitled to a payout. Insurance companies are used to dealing with life insurance claims so the process can be quite straightforward. 

How to make a claim

Step 1

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.

If you can’t find the policy document, or you don’t know which insurance provider you need to contact, try checking any relevant bank and credit card statements for any regular payments to insurers or perhaps an insurance broker. The insurer will need to know:

  • the name of the person who had the policy
  • the cause of death (as stated on the death certificate)
  • the policy number
  • who you are
  • about your relationship to the person who has died.

Step 2

The insurer will send you a claim form and tell you what information and documents you need to send them. This is likely to include the original death certificate (so you may find it useful to get several copies when you register the death) and the person’s birth certificate (or some other proof of their age).

Step 3

Once the insurer has agreed to pay the claim, payment can be made within days. The insurer should also stop taking premiums on the policy and repay any that have been paid since the date of death.

How the insurance is paid out

If you’ve been named as a person who will benefit from a life insurance policy (known as a beneficiary) and this has been written in trust  then the insurer will pay you directly. You don't have to wait for probate (the legal process to decide who has the right to deal with the person's estate) and there is no inheritance tax to pay on the insurance payout. 

If the life insurance policy wasn't written in trust, then the money will form part of the estate (everything the person who died owns) and will be dealt with by the estate’s executors. These people are named in the Will of the person who died. This typically takes around six months but can be longer.

If the life insurance was through the person’s employer, then the employer will sort out the insurance claim and decide who gets the money. However, the person who died will have been asked to complete an ‘expression of wish’ form and, if that named you as beneficiary, usually you will receive the payout.

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 to the beneficiary, which may be limited to a certain number of years. Income from an employer’s scheme is taxable, but a lump sum is usually tax-free.

If you’re insurance claim is rejected

If your insurance claim is rejected there are steps you can take to challenge the decision. In the first instance contact the life insurance company. If you’re unhappy with its response, you could take your case to the Financial Ombudsman Service

Useful link

Money Advice Service – life and protection insurance 

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This page is for general information only. It's not intended to replace any advice from health or social care professionals. We suggest that you consult with a qualified professional about your individual circumstances. Read more about how our information is created and how it's used.

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