Making a death benefit claim on superannuation or life insurance: Your FAQs answered – part 2

In part 1 of this series, we looked at what a death benefit claim is, who can claim, what documents are required, and the general timelines for processing. In this second part, we focus on the importance of acting early, the key deadlines you need to be aware of, and the steps you can take if your claim is denied. Understanding these processes is crucial, because failing to meet deadlines or not following the correct procedures can significantly affect your ability to secure the death benefit you are entitled to.

1. Seek advice early

One of the most important aspects of making a death benefit claim is ensuring that your interests are clearly communicated to the trustee as early as possible. Trustees have a legal obligation to consider all eligible claims before making a final decision on the payment of a death benefit. If they are not aware of your claim, or if you do not provide the necessary evidence in a timely manner, it may be more difficult to have your interests properly considered.

2. Prepare your initial claim carefully

This means that the Trustee's key obligation is to ensure that all key information is received before it makes its initial recommendation on distribution. This means that your earliest attempts to inform the Trustee (before recommendation) of your right to entitlement is usually your best chance of putting forward your most persuasive claim.

It is fair to say that whilst there is certainly an opportunity to have the Trustee review their initial recommendation for distribution (as set out below), it is often the case that a Trustee will stand by their original recommendation.

3. Claimant's right of review

There are strict time limits that govern death benefit claims, and these must be carefully observed:

• Proposed distribution (claims-staking period) - when the trustee issues a notice of proposed distribution, you will usually have 28 days to respond. During this period, it is critical to review the proposed decision carefully. If you disagree with the trustee's proposed distribution, you must respond within this timeframe, otherwise you risk losing your right to object.
• Internal Dispute Resolution (IDR) outcome - if you are not satisfied with the proposed distribution, you can lodge a complaint for internal review with the trustee. Under the Superannuation Industry (Supervision) Act, the trustee is required to provide a final IDR decision within 90 days of your complaint being lodged. This process provides a formal opportunity to ensure that all evidence and arguments supporting your claim are considered.
• AFCA complaint - if the internal review does not resolve the issue to your satisfaction, you can escalate the matter to the Australian Financial Complaints Authority (AFCA). AFCA is an independent body that handles disputes between consumers and financial institutions, including superannuation funds and insurance companies. To lodge a complaint with AFCA regarding a death benefit distribution, you must object to the trustee's final IDR decision within the 28-day claims-staking period and submit your AFCA complaint within 28 days of receiving the trustee's final IDR decision.
• Application to be joined to an AFCA death benefit complaint - if you were not the original complainant but have an interest in the outcome, you generally have 28 days from the date you receive notice of the trustee's decision (or within 28 days of the IDR outcome if you pursued IDR) to ask AFCA to consider your claim. It is important to note that AFCA will rarely extend this deadline except in exceptional circumstances.

Acting early and understanding these timeframes is vital. Missing deadlines can limit your ability to challenge a trustee decision or participate in the dispute resolution process.

4. What can I do if I am unhappy with the Trustee's decision?

If your death benefit claim is denied, or if the trustee distributes the benefit in a way that you do not agree with, there are several avenues available to challenge the decision. While this can be a stressful and sometimes lengthy process, knowing your options can help protect your entitlements.

• Request a review - the first step is to ask the superannuation fund trustee or insurance company to review its decision within 28 days of this decision. This allows you to provide additional evidence or clarification that may strengthen your claim. Often, disputes can be resolved at this stage without further escalation.
• Lodge an IDR complaint with the trustee - if the initial review does not resolve the issue, you can formally lodge an internal dispute resolution (IDR) complaint within 28 days of Trustee's final decision. The trustee is required to provide a final decision within 90 days. This is an important process because it provides a formal record of the trustee's reasoning and decision-making.
• Lodge a complaint with AFCA - if the internal review is still unsatisfactory, you can escalate the matter to AFCA. You have 28 days from the date you receive notice of the trustee's decision (or within 28 days of the IDR outcome if you pursued IDR). AFCA provides an independent and impartial review of disputes involving superannuation and insurance. It is important to remember the time limits for AFCA complaints, as outlined above, to ensure your complaint is considered.
• Seek legal advice - in more complex cases, or where the trustee or AFCA decisions are disputed, seeking legal advice is highly recommended. A lawyer with expertise in superannuation and insurance law can help you navigate the appeals process, represent your interests, and if necessary, take the matter to court. Legal advice can also clarify your rights and help you understand the likelihood of success at each stage of the process.

Challenging a denied claim can be a demanding and emotionally taxing process. However, understanding the correct procedures, deadlines, and your rights will significantly improve your chances of achieving a fair outcome. Early preparation, careful documentation, and timely action are key to protecting your interests in these situations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.