Making A Death Benefit Claim On Superannuation Or Life Insurance: Your FAQs Answered – Part 1

When a loved one passes away, the emotional toll can be overwhelming, and dealing with the practical aspects of their affairs can add significant stress. One important task may involve making a death benefit claim, particularly if the deceased had superannuation or life insurance. Understanding the process, eligibility, and potential complications can help ease some of this burden. In this article, we address five common questions people often have when considering a death benefit claim.

1. What is a death benefit claim?

A death benefit claim is a request to access the funds or benefits held by a deceased person, typically within a superannuation fund or through a life insurance policy (Death benefit cover). These benefits are intended to provide financial support to the deceased's dependents or beneficiaries after their death.

Superannuation death benefits usually include the deceased's accumulated superannuation balance, and, in some cases, an insurance payout attached to the superannuation policy. Life insurance death benefits, on the other hand, are paid out by an insurance company according to the terms of the deceased's insurance policy.

Understanding what a death benefit encompasses is essential because it will influence how you approach the claim. For instance, superannuation benefits are generally managed by the superannuation fund's trustee, who has the discretion to determine how the benefit is distributed among potential beneficiaries. The Trustee will be assessing the claim in respect of Super balance and any Death benefit insurance.

2. Who can make a death benefit claim?

Whilst insurance cover follows the passing of a loved one, not everyone is eligible to make a death benefit claim, and the specific rules can vary depending on the type of benefit being claimed and the deceased's circumstances. Generally, the following individuals can make a claim:

• Nominated beneficiaries – if the deceased nominated beneficiaries on their superannuation account or life insurance policy, those individuals have the first right to claim the death benefit. These nominations can be binding or non-binding, with binding nominations requiring the trustee to distribute the benefits according to the deceased's wishes.
• Dependents – even if a nomination was not made or is non-binding, dependents of the deceased may be eligible to claim. Dependents typically include a spouse or de facto partner, children (including adult children), and any person who was financially dependent on the deceased at the time of death.
• Estate/Legal representative – if no eligible beneficiaries are nominated or if there is no clear dependent, the death benefit may be paid to the deceased's estate. In such cases, the legal personal representative (executor or administrator of the estate) would make the claim and distribute the benefit according to the deceased's will or the laws of intestacy.

Understanding who is eligible is crucial because it will determine the approach you take in lodging the claim. For example, if you are a dependent but not the nominated beneficiary, you may need to contest the nomination with the superannuation fund trustee.

3. What documentation do I need to submit a claim?

Submitting a death benefit claim involves providing several key documents to substantiate the claim. The required documentation generally includes:

• Death certificate – the death certificate is the primary document required to prove that the person has died. This certificate must be an official document issued by the relevant authorities.
• Proof of relationship – if you are claiming as a spouse, child, or other dependent, you will need to provide proof of your relationship to the deceased. This could include marriage certificates, birth certificates, or evidence of a de facto relationship, such as joint financial statements.
• Proof of financial dependence – if your claim is based on financial dependence, you may need to provide evidence showing that you relied on the deceased for financial support. This could include bank statements, financial agreements, or affidavits.
• Nomination forms or will – if the deceased made a nomination or left a will, these documents will need to be provided to the superannuation fund or insurance company to clarify how the death benefit should be distributed.

Gathering and submitting the correct documentation is critical to ensuring your claim is processed efficiently. Incomplete or incorrect documentation can lead to delays or even denial of the claim.

4. How long does it take to process a death benefit claim?

The time it takes to process a death benefit claim can vary widely depending on the complexity of the case, the specific rules of the superannuation fund or insurance policy, and whether there are any disputes. On average, a straightforward claim might take between one to three months to be processed and paid out. However, if the claim is contested or if there are complications with the documentation, the process can take much longer – sometimes up to a year or more.

Several factors can affect the timeline, including:

• Completeness of documentation – providing all necessary documentation upfront can significantly speed up the process. Missing documents will likely result in delays.
• Disputes among beneficiaries – if there is a dispute among potential beneficiaries, such as disagreements over the validity of a nomination or claims of financial dependence, the trustee may need to investigate, which can prolong the process.
• Trustee's discretion – in cases where the trustee has discretion over the distribution of the death benefit, they may take additional time to review the circumstances and make a decision that they consider fair and equitable.

Understanding the potential timeline helps set realistic expectations and allows you to plan accordingly, especially if you are relying on the death benefit for financial support. This article has focused on what a death benefit is, who can claim, what documents are needed, and how long the process may take. In part 2, we will explain why acting early is critical, the deadlines you must meet, and what steps to take if your claim is denied.

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.