Often this is a question about 'Am I protected?' The person is looking for reassurance that the insurance they have taken and have been paying for is going to work.

It is also a very practical question.

If you have been relying on your recently deceased partner's income to pay the bills, it is a really valid question.

Life Cover claim payment timeframes:

That said it is at varying degrees. In the case of a sudden death accident claim, it is likely to take at least ten days for a claim payment to be made following the completed claim form and death certificate being submitted. 

In this situation, there is also a claim to be made to ACC for fatal entitlements and funeral grant. 

This is where your life insurance policy's funeral benefit is also able to be paid. Notification of death we can usually have this part of a claim expedited in 48 hours. 

Which gives family members peace of mind that at least funeral costs can be covered.

What this does not show is where a death claim has the insurer asking more questions for some reason. This also does not reflect the time it can take to get a death certificate either. Both can slow the process down considerably.

With a terminal illness, or longer more drawn out medical death claims, there's likely to be more information on hand and the process can be sped up more significantly.

That is life cover, and the vast majority of these get paid without any hassle with the insurance company at all.

Living benefits:

About 1 in 20 insurance claims for life benefits (Life Insurance rather than Life CCover) have claims declined for a number of reasons. 

Often with the living benefits like trauma and income protection, where exclusions are in play, or severity of conditions is not severe enough.

Life cover tends to be straightforward in comparison, but it can have delays, sometimes significant delays. Also, it is not always black and white.

Trauma & Critical Illness claim payment time frames:

With trauma and critical illness claims, there is a 14 survival requirement from diagnosis before a claim can be considered. This delays things outright. Especially if time on life support is not included in the 14-day survival calculation. Some include it some don't.

The challenge with trauma claims is getting the diagnosis right and with enough information for the insurance company to make a decision. 

If you are a regular reader of my blog, you will have seen my lengthy post on heart attack definitions. 

The challenge is not so much the diagnosis of the condition but the level of impact that condition has. 

I am currently working through a claim for a client with an older trauma policy we took over. Our discussion with the insurance company is one of intent as the condition is severe enough for a partial claim payment but not quite severe enough for a full claim. 

My point of contention is with the medical measurement it would be a full claim for a male, but not for a female. I am arguing the intent of the policy vs. the actual wording. A difficult argument and one that we don't always win. The reality is the client concerned will receive some support with way.

Income Protection and other monthly paid disability benefits:

Again like trauma, it is about the medical information available.

Most income protection claims take 6-8 weeks to get all the information together, which is 2-4 weeks past the time most four-week wait policies are supposed to start paying.

Unfortunately, a four-week wait for a claim is somewhat misleading, except for the simplest of claims, and needs to be taken into account. 

The insurance company will pay what they need to from four weeks; it is likely that it will not be at four weeks. The first payment is likely to be a catch up one.

This is due to several things. Getting the diagnosis right. A GP may have the right answer and sign you off for the right reasons, but the specialist on the condition is the one that the insurer needs the diagnosis from, this can take time.

You say hey my Dr knows me and they are medically trained. Yes, that is true. However, it is also very easy to confuse a condition with two or three different conditions that look very similar. 

The specialist will be able to determine this to ensure both the right diagnosis but also the right treatment plan. The wrong treatment plan could be dangerous and create an extension of the disability unnecessarily.

Then there are the delays because you are focused on getting treatment and recovering and not doing paperwork. Cognitive function claims have this problem especially, whether it is a head trauma, mental health conditions, or degenerative brain conditions, it all slows things down.

Lastly the financial proof, in many claims, proof of income is required to ascertain loss for the amount of the claim payment. 

If you have to go to your accountant for this, it takes even more time as the insurer will not pay you without the evidence of loss. 

This is a significant part of the reason we recommend agreed value income protection benefits; we remove the need for financials to get claims underway.

Total and Permanent Disability:

This one is a tough one. Typically the policy wordings say measured at 3 or 6 months. Again a case of the medical evidence to support it. 

On other policies with TPD as a rider benefit, this could be 12 months or two years, though usually, there are other insurance benefits paying in these cases.

Sometimes it is about the situation

Being able to, but not wanting to, go back to your pre-disability occupation is not a criteria for a claim. 

It could be that until you are put back in the pre-disability occupation situation, the medical diagnosis cannot be conclusive. 

While you do not try and return, or you pursue a different occupation, you may not quite meet the criteria for a claim payment. 

I have a colleague where their client has done just this, and it changes the whole perspective of the claim and the assessment.

TPD is one of the most difficult benefits to qualify for a claim; it is dependent on you and your capabilities at the time. 

Being a paraplegic for one occupation may be TPD however for another occupation you may still be able to work just as effectively as before, though likely with significantly more support. 

Keeping in mind many current TPD policies with this example would be paying a claim. However, it highlights why it can have such differing outcomes.

Executive summary, how long?

Life cover 48 hours for the funeral benefit and from 10 days for the rest.

Trauma claims, minimum 14 days though 24 days from diagnosis is common, longer if more medical information is required.

Income Protection, 4-6 weeks minimum, though dependent on the waiting period which could be longer.

TPD 3 to 6 months minimum for TPD benefits on their own or with Trauma cover. 12-24 months when they are bundled into income protection policies. Some conditions are at the discretion of the insurer can be paid sooner. However, it is likely longer in many situations.

If you have any concerns or questions about when your policy is likely to respond, please contact us and have a chat. Often we can improve things without increasing premiums significantly.