How do you make a life insurance claim?

• Most life insurance claims sail through with prompt settlements which is reassuring to hear.

• But traumas such as serious injury or the death of a loved one can leave you floundering and in need of practical help.

These are difficult times. The good news is that where there's a life insurance policy, there's likely to be lots of support. This guide will give you the tools you need to make a claim so that you have enough space to manage your emotions. Here's how to claim on a life insurance policy.

Types of life cover

Circumstances and types of cover are going to dictate how to make a claim. If your loved one had term life cover, you'll want to claim a lump sum in the event of their death.

As for the other types of living life insurance, you can claim:

1. Total and Permanent Disability Insurance (TPD) which pays you a lump sum if you find you can't work again due to a lasting disability.

2. Trauma insurance. This pays out a lump sum if you can't work because of a serious injury or illness.

3. Income protection insurance. This is an ongoing payment that replaces up to 70% of lost income should you be unable to work because of an injury or illness for a while.

How to claim on a life insurance policy in the case of death

Not all types of life insurance policies are the same. Procedures will vary between different insurers as well. As a general rule, you can expect the following steps in the claims process.

Documents you are likely to need

• A completed claim form from your selected insurer.

• The original policy document and policy schedule

• A death certificate in cases of term life cover, Medical Attendant's Certificate or another document showing evidence of death.

• A certified copy of evidence of the deceased's date of birth eg: birth certificate, valid driver's licence or passport

• A certified copy of proof of the claimant's identity eg: birth certificate, valid driver's licence or passport, and their relationship to the insured.

Information you will need to supply

For claims related to disability, illness or injury as opposed to term life cover, gather up all the facts that your insurer is likely to ask for.

Be prepared. This can be time-consuming and may require careful research.

The information you'll need is likely to include the following:

• When, where and how your disability, injury or illness occurred

• Your employment and medical history

• The contact details of any doctors, physiotherapists, chiropractors or other medical staff you've consulted

• Evidence of when you received any treatment in hospital or elsewhere

• A description of how your disability, injury or illness has prevented you from carrying out your job

• Evidence of your salary when you were last able to work

• Details of any occupations or activities you could still carry out

Certified copies explained

Certified copies are photocopies of an original document signed by an official. A doctor, solicitor, bank manager, police officer or Justice of the Peace can act as a signatory. You will be able to send off or give the certified copy to a third party and keep the original.

Is there a time limit on making a life insurance claim?

There's no statutory time limit for making a claim. However, there is a typical six-year limitation period applicable to all contract claims across Australia, the only exception being the Northern Territory where there is a three-year limitation period.

Individual insurance contracts can specify a time limit and these can vary. It's always best to inform your insurer that you intend to file a claim as soon as you can.

How long do life insurance claims take to process?

It's in everyone's interests for the process to be quick. Claimants are often in urgent need of cash. Insurers want satisfied customers.

They also want to avoid high interest charges for delaying the payment of claims. Most insurers settle in a matter of days or weeks. Things can get complicated if a person failed to disclose their medical history in full. It's also important to keep across premium payments. If they're missed, a policy may become invalid.

Most policies have exclusions. These can include death as a result of suicide or serious injury due to some form of illegal activity. When an insurer suspects fraud or non-disclosures, even inadvertent ones, the whole claim process can grind to a halt.

Be prepared

One of the best things you can do when making a claim is to get your paperwork in order. Claims can be the result of an unwanted or unexpected serious event. Organising forms and certificates can be a welcome distraction and bring back a sense of control. Remember, we can help direct you to those who'll be able to process your claim.

Get in touch with us today for more information.

List of insurers claim forms:

• Zurich - Call 131 551 or click here https://www.zurich.com.au/claims/life-claims.html

• One Path - Call 1300 555 250 or click here http://www.onepath.com.au/insurances/claims.aspx

• TAL - Call 1800 101 016 or click here https://www.tal.com.au/claims/make-a-claim

• NEOS - Call 1300 090 188 or click here https://neoslife.com.au/existing-customers/make-a-claim/

• BT Super - Call 1300 553 764 or click here https://www.bt.com.au/personal/insurance/support/making-a-claim.html

• ClearView - Call 132 979 or click here https://www.clearview.com.au/life-insurance/claims

• MLC - Call 1300 125 246 or click here https://www.mlcinsurance.com.au/how-insurance-works/understanding-the-claim-process

• Comminsure - Call 13 1056 or click here https://www.commbank.com.au/personal/insurance/life-insurance/how-to-make-a-claim.html

• AIA - Call (03) 9009 4850 or click here https://www.aia.com.au/en/adviser/help-support/claims-support.html

How do life insurance payouts work?

So, just how do you collect life insurance? This is dependent on your policy and whether it's funded in or out of super.

Below is a table that breaks down how life insurance policies

For life insurance through superannuation, it's determined by the trustee of your super fund. They'll decide if you meet the conditions of release from your super. If you don't, then the money will be paid into your super but you won't be able to access it until you can access all your super (i.e. when you reach a certain age or retire).

In part-funded life cover -- where some of your life cover is paid via your super -- the insurer will always try to pay through your super first. If it's clear the trustees won't release your funds, then the insurer will pay it directly into your pocket. For life insurance outside of super, the policy owner receives the payout directly, as their name is on the policy and they are responsible for paying the premiums.

Is life insurance paid out in lump sums?

Yes, you or your beneficiaries will receive a lump-sum payment upon your life insurance provider paying out on your policy.

The only exception is income protection, which is paid out in monthly benefits.

What percentage of life insurance policies are paid out?

The latest figures from Moneysmart show the industry average for life insurance claims on 'direct policies' -- life cover purchased directly through an insurer -- is 90%. However, that figure fluctuates according to the insurer, with some being as low as 83.1%*.

That number is higher for retail life insurance (also known as advised life insurance), which are the type of policies that Compare Club compares. Moneysmart puts the average claims acceptance figure at 96.4%, and some insurers on our panel pay out in 98.3% of claims. Similarly, you may be wondering how long do life insurance policies take to pay out? It depends, but the industry average is around 1.5 to 3 months for term life cover.

How much is a typical life insurance payout?

There is no set -- or even average -- figure for life insurance payouts. It will depend entirely on the amount of cover you've taken out, your insurer, and the circumstances in which you are making a claim.

What reasons would life insurance not pay out?

It's essential that you're honest with your insurer when you apply for cover. If you don't disclose anything they ask for, or you make a false statement, then the insurer will probably reject your claim. Each insurer will also have different definitions and exclusions on what they will and won't pay out on.

You also need to make sure your claim meets the insurer's definition, so ask lots of questions and always read the PDS.

Matthew Lang is the general manager of life insurance at Compare Club. Matthew leads a team of dedicated professionals who are passionate about helping individuals and families make informed decisions about their life insurance needs. Whether it's finding the right coverage for your specific circumstances, comparing policies, or optimizing your existing policy, Matthew and his team are here to provide expert guidance and support.

Meet our life insurance expert, Matthew Lang

Matthew's top life insurance tips

• 1

  Identify what you want out of life insurance before you buy. Knowing the purpose of your life cover will help you choose a policy that meets your needs.

• 2

  It's easy to assume that the sole purpose of life cover is to leave money behind for your family, but there's more to it than that.

• 3

  Life insurers like those on our panel pay an average of 97% of claims in full.

• 4

  There are different types of life insurance, including term life insurance, income protection, trauma cover and total and permanent disability cover.