AFRM CLAIM STORIES: Industry super fund takes 20 weeks to pay out a straight forward death claim

Posted by Bethany Shaw on 21 March 2017

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claim storiesIndustry super fund takes 20 weeks to pay out a straight forward death claim

What happened for the client to make a claim?

Our client was tragically killed in a road accident in August last year. We want to share this story with all our clients as her life insurance was held in an industry super fund which promotes they have ‘award winning’ insurance and they ‘care about you’, however our experience with this claim indicates otherwise.

Sequence of events

  • August: Our client was tragically killed in a road accident
  • Early September:  The full set of claim forms were lodged with the super fund once the death certificate was issued
  • Mid-October: After the forms were lodged, we received multiple requests from the super fund for additional information until they finally lodged the forms with the group insurance provider
  • Ongoing: AFRM followed up with the super fund weekly after that and continually received the same response ‘it’s with the insurer’
  • Ongoing: Despite AFRM using its insurer contacts to go around the super fund and deal directly with the insurer, the insurer’s group insurance team was highly unresponsive and would not give out any information, continuously directing us back to the super fund
  • Early December: we finally received confirmation from the super fund that the insurer had approved the benefit payment. It took them seven weeks after they had all the forms from the super fund to agree that the client was deceased and a claim was payable
  • Mid-December: the super fund trustee approved that the claim was valid and then sent out a letter to all claimants informing them of the trustees decision. There was only one claimant. This was then the start of the ‘staking period’ of 28 days which is to allow any claimant to appeal the decision. Despite there being only one claimant they would not shorten the staking period. If no challenges were received, then five days from the end of the staking period the payment would be made
  • Late January: The client’s husband informed AFRM that the claim payment had been received, 20 weeks after the claim forms had been lodged with the super fund

What are the lessons learnt?

This claim highlights that despite how industry super funds promote themselves, they can be extremely inefficient when it comes to paying out claims. A long, drawn out process to pay a simple death claim causes ongoing stress for the surviving family and prevents them from moving on from a terrible tragedy.

When AFRM manages a death claim directly with our preferred insurers it generally takes anywhere up to six weeks after the death certificate is available for the benefit to be paid.

If you would like to speak to one of our advisers please contact us. 

Please note, this information has been prepared by Australian Financial Risk Management Pty Ltd (AFRM) ABN 21 001 696 868. AFRM hold an Australian Financial Services License (AFSL) 237186. The information is for general purposes only and has been prepared without taking account of your objectives, financial situation or needs. AFRM recommends that you seek professional advice before acting on any information contained herein.