Call for insurers to make Funeral Payment Pledge to bereaved families awaiting full life insurance payments

30th September 2016

A group of life insurance advisers have called on insurers to advance bereaved families money to pay for funeral costs while they wait for life insurance claims to be fully processed and paid.

The Protection Distributors Group, which consists of ten leading intermediary firms in the UK protection market is concerned that families are sometimes having to wait several months before payments are processed.

It is calling for insurers to do more to help bereaved families who face weeks or months to receiving the full proceeds of a life insurance policy.

As a minimum, the group is asking insurers to ensure families can pay funeral costs by committing to a ‘Funeral Payment Pledge’ proactively offering families at claim stage to pay the funeral director where no other arrangements have been made, up to £5,000.

Emma Thomson, head of customer care at LifeSearch, who is chairing the group, said: “Some insurers already offer help to families who don’t have a Trust or Will in place, but as an industry we need to do much more. In addition to covering funeral costs we would like insurers to advance higher amounts to families to ensure other immediate expenses can also be met. Whilst many claims are paid quickly, where there are probate delays, some families wait several months for payment, even a year or two in some cases. Covering the funeral cost as a minimum, and indeed extending this to advance higher amounts would make a real different to these families.

“And given that 99% of life claims are paid, going even further by offering to pay the funeral as soon as the insurer is notified about the claim would provide extra help, and pose minimal risk to insurers.”

Roy McLoughlin partner at IFA Master Adviser and a member of the Protection Distributors Group, added: “There is some good work being done by insurers but the Funeral Payment Pledge is a good starting point for those insurers who currently don’t have anything in place. Aviva currently offers to pay the funeral, and other insurers such as Scottish Widows go further, advancing up to £50,000 even where there is no Will or Trust in place, subject to certain criteria. A few insurers will agree to pay the funeral but only if asked; the PDG wants this to be offered to all families automatically as part of the claims process. ”

Andy Parker technical claims manager at insurer LV= said: “At LV= we fully support this initiative and are making changes to our systems and processes so that we can offer this to our members and their families by the end of the year.”

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