Quicker Life Insurance Payouts On The Way

Life insurance payouts after a death will be much faster now that the Association of British Insurance is forcing insurers to make payments within four weeks of bereavement.

It has previously taken life insurance companies around four months to payout money after the death of the insured person, however new ABI guidelines will impose a four week timescale from now on.

There are more than 32,000 life insurance claims made in the UK each year so the long delays between death and payout have caused many bereaved people to suffer financial hardships after the death of their partner.

The long delays have been attributed to the lengthy legal processes associated with winding up a deceased person’s personal finances, particularly if there are problems with the will or powers of attorney.

Working with the Law Commission, the ABI found a solution to get around the legal process to ensure a beneficiary can access a life insurance payout quickly and therefore avoid any unnecessary financial stress.

The new process is remarkably simple. The life insurer will ask the main beneficiary to complete a declaration where they agree to pay back any money they receive from the policy if the legal process decides they were not the rightful recipient.

MoneyHighStreet.com Comments: Sadly it is not just older people who die leaving bereaved loved ones. We have heard of a couple of recent cases in which younger people have suddenly died leaving their young families in financial as well as emotional turmoil. Mortgages have to be paid, utility bills still come in, yet salaries stop at the point of death.

This is one reason why this is a very welcome initiative by the ABI. It also underlines the importance of making a will and keeping it up to date.