The Association of British Insurers has today issued guidelines regarding settlement of life insurance claims to expedite the settlement process.
The trade body, in association with the Law Commission has drafted the new best practices guide on processing new claims.
The new process would require claimants to furnish documentary proofs such as birth certificate, marriage certificate or mortgage deeds to establish that s/he is the main beneficiary.
Claimants also undertake to refund any money they receive if it is proven legally later that they were not eligible to receive any payments.
A research carried out last year by reinsurer RGA on behalf of Investment & Life Assurance Group found that life insurance claims were settled after 73 days on an average.
The new guidelines will ensure uncomplicated claims are settled within 4 weeks, the ABI said.
Barring cases where the person has died under mysterious circumstances or the estate has legal complications, the new guidelines will be effective for all existing and new policies.
“Dealing with bereavement is hard enough, without the added stress of worrying about money. 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”, said ABI director general Otto Thoresen.
“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”.
The Investment & Life Assurance Group had published a report last July proposing various steps like setting up policies in trust or nominating beneficiaries at application stage to reduce the claims settlement process.