How to Make a Life Insurance Claim

How to Make a Life Insurance Claim

When losing a loved one, knowing how to make a life insurance claim is essential to help cover any expenses resulting from the loss. Losing a loved one is never easy, but it’s a reality we all must face at some point.

To make a life insurance claim in Canada, notify the insurer immediately, providing a claim form, the deceased’s death certificate, and the original policy. Additional proof of identity and the insured’s relationship may be needed. Review the policy for specific instructions.

Once approved, the insurer will disburse funds to designated beneficiaries. For issues, consult a financial advisor or the insurance ombudsman.

Life insurance can offer crucial financial support during challenging times, so promptly starting the claims process ensures your loved ones receive the benefits they deserve. This article covers the essential procedures and details on how to make a life insurance claim in Canada.

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Before filing a life insurance claim

Before we dive into how to make a life insurance claim, you should note that it’s your responsibility to inform the life insurance company about the policyholder’s passing and provide the necessary documentation.

Typically, the insurance company is not immediately aware of the policyholder’s demise, and they do not actively search for beneficiaries. Thus, initiating the life insurance claim process falls upon the family members or specified beneficiaries.

Moreover, beneficiaries may need to be made aware of the existence of a life insurance policy. Conversations about death and inheritances can often be uncomfortable or overlooked.

It’s imperative to notify your beneficiaries of any life insurance policy you’ve taken out, ensuring they are well-informed and prepared to make a claim when needed.

How to determine if a loved one has life insurance

If you suspect that a loved one had a life insurance policy and you may be eligible for a payout, consider these initial steps:

  1. Examine bank records: Check if there are any bank records indicating premium payments, which may offer clues about the existence of a policy.
  2. Review the deceased’s documents: Look for any evidence of a life insurance policy in their files, such as policy documents or letters from the insurance provider.
  3. Inspect their mail: Go through the deceased’s mail for at least a year, paying close attention to any notices about premiums or correspondence from the insurance company. If you discover a policy or suspect its existence, contact the insurance carrier, even if you’re uncertain whether the coverage is still active.

After confirming the existence of a life insurance policy, let’s explore how to make a life insurance claim in Canada.

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When to submit a life insurance claim

What’s more important than learning how to make a life insurance claim? Knowing the time limit by which you can file a life insurance claim.

Filing a life insurance claim in Canada can be emotionally challenging. Still, it’s vital to do so promptly after the covered individual’s passing.

Evaluate the policy and adhere to any specified time constraints mentioned in the contract to ensure a timely assessment. The terms and conditions of each life insurance policy may vary, so it’s essential to understand the specific requirements of the policy in question.

How to make a life insurance claim

Typically, the designated beneficiary named by the policyholder or the estate representative can submit a claim on the relevant life insurance policy. So, it’s crucial to review the policy documents thoroughly to ensure that the right person or organization initiates the claim process.

To ensure a smooth life insurance claim procedure in Canada, follow these guidelines:

  1. Obtain the policy or certificate: Whenever possible, secure the original policy contract, as it contains crucial details, such as the policy number. Occasionally, the insurance company may request the return of the policy contract as part of the claim process. Make a complete copy of the policy for your records if you must return it.
  2. Identify the policy type: Determine whether the policy applies to an individual or a group, association, or place of employment. For group or association policies, contact the broker or life insurance agent responsible for arranging the coverage. For specific guidelines, reach out to the appropriate association or the claim department of the insurance provider for guidance.
  3. Gather the necessary paperwork: Life insurance claims typically require three forms:
  4. Claim form: This form collects basic information about the claim and the beneficiary. Complete it with details about the insured and the insurance policy.
  5. Certificate of Death: Obtain this official document from the funeral home where the deceased’s final services were held, which is usually provided for a small fee.
  6. Physician’s report: Comprehensive medical information must be filled out by the attending physician or the hospital. This form often adheres to a provincial standard, and there may be a small fee associated with its completion. Initiate this process by contacting the attending physician or the hospital where the covered individual died.
  7. Submit the completed forms: Provide the insurance company with the three completed forms (claim form, certificate of death, and physician’s report). Afterwards, the insurance company will begin processing the claim.

Life insurance claim processing timeframe in Canada

The processing time for a life insurance claim in Canada can vary significantly based on various factors. In general, there are two possibilities:

  1. Fast processing: more minor claims or policies in force for an extended period often result in prompt payments. Even substantial clams in the seven-figure range are usually quickly settled if there is no need for a detailed review. In such cases, insurance companies prioritize efficiency to expedite the process.
  2. Delayed processing: If the policy is relatively new (less than five years old and significantly less than two years old) or has complexities or concerns related to the claim, the processing period can extend to 4-6 months. In these situations, insurance companies conduct a thorough assessment, which may involve obtaining medical records from the provincial health plan to access the insured’s medical history. Getting these records can take approximately 90 days. Additionally, the insurer may need to communicate with the insured’s healthcare providers to gather more comprehensive medical information. The actual claim payment is typically made a few days to a few weeks after the claim evaluation concludes.

It’s worth noting that many life insurance companies in Canada still process claims via traditional mail. Some individuals collect the check directly from the insurance company’s headquarters to expedite the process, especially when the beneficiary and the insurance company are in the same province.

Alternatively, the check can be sent to the beneficiary via overnight courier to reduce the waiting period further.

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When can beneficiaries expect payment?

Canadian insurance companies make an effort to expedite the processing of life insurance claims to avoid potential penalties for delays. However, certain situations can affect when beneficiaries receive the payout:

  1. Death during the contestability period: A life insurance policy typically has a two-year contestability period following the policy’s effective date. If the insured person passes away during this time, the insurance company may scrutinize their medical records to verify the accuracy of the application.
  2. Suicide: Insurance companies may deny a claim if the covered person commits suicide during the contestability period. However, most policies cover suicide as a cause of death once the contestability period expires.
  3. Homicide: In cases of murder, insurance companies may withhold payment until all beneficiaries are cleared of any suspicion following a thorough investigation.
  4. Death during a high-risk activity: If the insured individual dies while engaged in a risky move they did not disclose on their insurance application, the insurer has the right to reject the claim.
  5. Death during illegal activity: If an insured person dies due to engaging in unlawful conduct, such as driving while intoxicated, the insurance company will not pay the death benefit.
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Conclusion

By now, you should already know how to make a life insurance claim. We understand that filing a life insurance claim during this difficult time can seem overwhelming, as it often comes with a wave of emotions and paperwork.

However, you should remember that life insurance serves as a way for your departed loved ones to provide for their family even after they’re gone.

Suppose you find yourself in a situation where you believe you have a valid life insurance claim after the passing of a loved one. In that case, you must inform the insurance provider of the covered person’s death and provide the necessary documentation.

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FAQs about how to make a life insurance claims

How does life insurance payout work in Canada?

When you pass away, your life insurance policy is designed to provide your beneficiaries with a tax-free lump-sum payment, known as the death benefit. Initiating the process to receive this benefit typically involves your beneficiary submitting necessary documents to the insurance company, including a claim form, a death certificate, and a doctor’s report.

How long does it take to get a life insurance payout in Canada?

In Canada, beneficiaries often receive the life insurance payout within a timeframe ranging from two weeks to sixty days after filing the claim. However, the duration may vary based on factors such as the cause of death and the timing of the policyholder’s passing.

Can I take money out of my life insurance in Canada?

Many whole life insurance contracts in Canada allow policyholders to make partial or complete cash value withdrawals. These withdrawals can be a lifeline during unexpected financial crises. It’s essential to understand that such withdrawals directly impact the overall value of your death benefit, potentially reducing the amount available to your beneficiaries in the future.

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November 14, 2023
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