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Faster life insurance payouts on the way

Faster life insurance payouts on the way

Category: Life insurance

Updated: 26/11/2012
First Published: 24/05/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Life insurance claims will be paid out more quickly after insurers were issued with new guidance over how to process claims.

More than 32,000 life insurance claims are made by families who have lost a loved one every year in the UK, with a typical wait of around four months before the payment is made.

However, under guidelines put forward by the Association of British Insurers (ABI), it is hoped claims will be able to be turned around in just four weeks.

Working with the Law Commission, the trade body has developed a solution to get around the lengthy legal process associated with winding up a deceased person's estate.

The process involves the life insurer asking the claimant to provide evidence that they are the main beneficiary, rather than having to wait for the legal process to prove they are.

At the same time, however, the claimant will also have to complete a declaration agreeing to pay back any money they receive from the policy if the legal process goes on to decide they were not the rightful recipient.

"Dealing with bereavement is hard enough, without the added stress of worrying about money," said Otto Thoresen, the ABI's director general.

"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."

Many people take out life insurance because, if they die, they want their partner, spouse or family to be able to cope financially.

It usually pays out a lump sum after the insured person dies, and can be taken out by one person on their own or jointly with someone else, for example by a couple who are buying a home together with a joint mortgage.

Protecting yourself and your family financially against any unforeseen circumstances should always be at the top of your list of priorities

Moneyfacts.co.uk have partnered with Torquil Clark Life Insurance to help you find the best life insurance deal.

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Under no circumstances should you cancel an existing life insurance policy until a new one has been arranged. Torquil Clark Life Insurance is a trading name of LifePolicies Direct Ltd which is authorised and regulated by the Financial Services Authority.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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