When a prospective client is trying to decide on which life insurance company to purchase a policy from, a question they often ask me is,”how well does the company pay its life insurance claims?” That’s a valid question. After all, when one purchases a life insurance policy, what one is purchasing is a promise from the insurance company that, upon the death of the insured person, they will pay the claim promptly and efficiently. However, while death is guaranteed, prompt and efficient payment of the death benefit isn’t – it’s only a promise.
As a broker with LifeInsure.com, my recommendations are typically based on company strength, which is an indicator of a company’s ability to pay claims – not the speed and efficiency in which they do so. We also can base a recommendation on our own experience with our clients’ claims experiences, which is a fairly good indicator. To be honest, though, we aren’t always involved in the claims process (other than, perhaps, getting the claims form for the client), as most folks choose to work directly with the insurance company (unless there’s a problem, at which time we step in to help). So, in all reality, we (or other insurance brokers/agents) have limited experience with the claims process.
This is why I was very happy to read a recent study by LIMRA, an association that provides research, consulting, and other services to insurance and financial services companies. The study, The Moment of Truth: Individual Life Insurance Claimant Satisfaction, shows that 95 percent of life insurance beneficiaries are “satisfied” overall with their life insurance claims experience. Additionally, nearly 75% of the beneficiaries reported that the life insurance claims process was easier and less stressful than other administrative tasks they have done.
Many of the beneficiaries surveyed commented on how quickly the claims were processed and paid. The median turnaround time in the study was about 19 days which, according to a majority of respondents, was quicker than they had expected.
LIMRA surveyed 4,242 life insurance beneficiaries who had received a death benefit from one of the 11 participating insurance companies during the second quarter of 2012. Favorable outcomes measured were: overall satisfaction, likelihood to do business with and recommend the company, and degree to which they now value the role of life insurance.