If someone dies and you're included on their life insurance policy, you may be entitled to some money. Practical tasks like making an insurance claim can seem daunting when someone close to you has died. That's why we've put together clear information explaining what life insurance is, and how to make a claim.
What is life insurance?
Life insurance, also called life cover, pays either a lump sum or regular payments when someone dies. The amount paid depends on the level of cover the person bought.
Life insurance gives financial support to people who depended on the person who died, like their partner or children.
Life insurance can be taken out privately, or some people may get it through their employer.
Private life insurance
The two main types of private life insurance are:
- Term life insurance policies – these run for a fixed amount of time and only pay out if the person dies during the policy.
- Whole-of-life insurance policies – these pay out whenever the person dies.
How to make a claim on a private life insurance policy
There is no time limit to claim on a life insurance policy. When you're ready, contact the insurance company to start a claim.
You may not know which insurance company the policy is with, or the company might have changed its name. The Association of British Insurers has information on tracing insurance policies which could help with this.
You will need to send the insurer some documents, including a copy of the person's death certificate.
When the insurer has agreed to pay the claim, payment can be made in two ways:
- If the policy was 'written in trust', the insurance company will pay the money to whoever was named as the beneficiary. A beneficiary is someone who receives the money. There will not be any inheritance tax to pay on this money.
- If the policy was not written in trust, the money will be considered as part of the person's estate. The estate includes all the money, assets and possessions the person owned when they died. This means getting the money can take longer and it may be subject to inheritance tax.
Life insurance through an employer
If the person who died was employed, they might have had life insurance through their employer. This is usually set up separately to someone's pension, and may be called a death in service benefit. This type of life insurance provides an amount of cover linked to the person's salary.
When the employer has been notified of the person's death, they should give you an 'expression of wish' form. This will say who the person wanted to have the money (the beneficiary).
Some older workplace pension schemes include life insurance. The amount paid out depends on different things, including the type of pension scheme the person had.