Faster Death Claim payouts

In a splendid piece of news the ABI (Association of British Insurers) has recently published guidance for all life insurance companies to help them speed up the time it takes to pay out life insurance claims.


Historically there have been complex legal issues (so they said) as to why claims couldn't be paid until the estate of the deceased was wound up.

Now, with what is seemingly good old common sense, the insurance and legal professions (ABI & The Law Commission) have banged heads and come up with a solution. Under the new process, the life insurance company will write to the main beneficiary under a life insurance policy and ask them to complete a declaration, that states if they receive money and it turns out they were not the rightful recipient (or the claim should not have been paid) they agree to pay back the money.

Whilst this will not eradicate arguments over the minority of cases whether a claim was ultimately payable or not it should alleviate the hardship that arises for many families when a genuine claim is delayed in payment for estate winding up reasons.

There are well over 30,000 death claims a year normally paid in the UK and the ABI think this new guidance should reduce the average payout time from 4 months to 4 weeks.


Note: There will be exceptions, where the circumstances of the death are suspicious (usually but not always with the police involved) or in some complicated estates.