Life insurers take the wait out of policy pay outs

Death claim pay outs for bereaved partners and families will be fast-tracked under new guidelines issued by the Association Of British Insurers.

The claims process will cut the average time a financial provider takes to pay out on life insurance from four months to four weeks.

A recent study disclosed the average death claim takes 73 days to reach a settlement.

Over 32,000 life insurance claims are made every year in the UK.

Beneficiaries will have to provide proof they are named in the policy and identify themselves with evidence like birth or marriage certificates.

The pay outs will be conditional on claimants agreeing to repay any money to which they are not entitled.

Insurers will also delay settling claims on suspicious deaths or on complicated estates.

The guidance will automatically apply to all new and current policies.

ABI director general Otto Thoresen said: “Dealing with bereavement is hard enough, without the added stress of worrying about money.  This new life insurance claims process means the time it takes on average to receive a payout will drop from four months to just four weeks.

“We believe that this will go some way to alleviating financial hardship for a deceased person’s dependents, especially families on lower incomes who have few other assets available to rely on.”

One of the UK’s largest life insurance firms, Aviva, supports the scheme and is urging the industry to make settling death claims even faster.

Robert Morrison, chief underwriter for Aviva said:  “It is great news for customers that the ABI has now created guidance on speeding up life claims processes across the industry.

“There is a general misconception that it is the insurer that causes any delay. The biggest part of that delay is often due to waiting for the Grant of Probate – or Scottish equivalent – to be obtained.

“We know that the death claim process for Aviva customers going through the current indemnity route can be more than 50 days quicker than those who need to obtain the full grant of probate and we are keen to use this route where we can to help our customers.

“We would urge the industry to go even further to look for additional ways to speed up the life claims process.”