How do life insurance claims work in Canada?

It's always good to know what you're in for when it comes to life insurance, be it as the person applying for insurance or as the beneficiary. The steps that need to be followed to file a life insurance claim can vary by insurer and the type of life insurance product you have. This article provides general information on filing a claim that can help you get a better understanding of how to make a life insurance policy claim. However, it is a good idea to check with your insurer to get more details.

What is a life insurance claim?

The death benefit of a life insurance policy is a tax-free lump sum amount that will be paid to the beneficiary and can be used however the beneficiary chooses. For example, it can be used to support a beneficiary's lifestyle, to help pay off a mortgage, or children's education costs. To receive the death benefit, the beneficiary is required to submit a claim to the insurance company within a specified period of time after the insured person's death. The claims process requires specific documents and information to be provided to the insurance company.

When can you claim a life insurance benefit?

It may be emotionally challenging to submit a life insurance claim; however, to allow for prompt assessment, a claim should be submitted as soon as possible after the death of the person whose life is insured. It is also important to review the policy to ensure any time limitations outlined in it are met.

Who can file a claim on a life insurance policy?

The beneficiary who was selected by the insured person or the estate representative can file a claim on that respective life insurance policy.

What steps could you expect when filing a claim?

Losing a loved one can be stressful, but before you can claim the insurance proceeds, there are a few things you may have to complete, depending on your insurer's requirements.

1. Inform the life insurance company

The insurance company needs to be notified of the life insured person's death to start the claims process. Afterwards, a claims package will be sent with instructions to the beneficiary or estate representative for completion.  

2. Fill out the required forms

The beneficiary or Estate Representative will need to fill out the required claims forms as requested by the insurance company. Some forms may need to be completed and signed by the insured person's attending physician/coroner.

3. Submit supporting documents

You may be asked to provide additional supporting documentation. These may include medical records, police report(s), a Coroner's report etc.

4. Wait for the payout to be made

The death benefit can be paid out in a few days after all the documents required by the insurer are provided and the claim meets all the requirements under the life insurance policy. However, the time it takes for a payout to be made depends on various factors. For example:

  • The accuracy and fullness of the information provided in the claims form
  • The inclusion of supporting documents, with one of them being information on the insured person's cause of death. This form may need to be completed and signed by the coroner or attending physician.
  • Whether all the requirements described in the life insurance policy are met. For example, if the insured person's death was caused by suicide, the insurer may have to investigate the claim leading to longer wait times or even a chance of an unsuccessful claim.

Can a life insurance claim be denied?

There are instances when a death benefit can be denied, and these may vary depending on your insurer. To get a better understanding, you should read your policy or get in touch with a licensed life insurance agent. Some examples of when a claim could be denied include: 

  • The insured person dies due to suicide within 2 years of the effective date of coverage.
  • Concealing or misrepresenting information during the application process  

Are the life insurance benefits taxable?

Typically, a death benefit received by the beneficiary is tax-free. Which means the beneficiary will receive the entire amount without it being taxed in the event the life insured were to pass away. Note that, if the death benefit is paid to the estate, it may be subject to costs, which may include probate fees, estate administration tax, etc.

Also, as there are different types of life insurance policies available in Canada, policies with cash value, interest or dividend or a withdrawal feature may be subject to tax.

It is advisable to read and understand your policy document carefully.

How can the beneficiary of a life insurance policy use the payout?

The death benefit can be used any way the beneficiary chooses. For instance, it could replace some of the deceased's lost income, pay for the mortgage, fund a child's education, or help alleviate financial stresses like debts. For those without a family, the benefit could be used by an institute or organization named by the insured person as their beneficiary.

Need to file a life insurance claim with TD Insurance? 

If you've lost a loved one who was insured with TD Life Insurance Company and you are the beneficiary or the estate representative, you can get started with the claims process by calling our toll-free line at 1-877-397-4187.

You can find more information about TD Insurance Life claims on our Insurance Claims website.

Learn more about life insurance.

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The content on this page is for general information purposes only and does not constitute legal, financial or insurance advice. Speak to a licensed professional advisor regarding your specific situation.

The information contained herein, is subject to change without notice.