Time Frame
If you have purchased life insurance you will only be covered in the event of your death or diagnosis with a terminal illness if you have paid your premiums on time. You will not be covered if your application was in any way fraudulent, perhaps because you misrepresented your state of health. If you have term insurance, you will of course only be covered if your death or diagnosis occurs during the agreed insurance period.
Assuming that your application for life insurance was legitimate, you have paid your premiums regularly and you are within the insurance period, the insurance company should pay out: even if you purchase life insurance and suffer a fatal accident the following week. However, if you commit suicide certain insurance providers will not honour the agreement, whilst others will only pay out if you have committed suicide several years after purchasing the insurance, see also Pay-Out Refusal.
If no one contacts your insurance company to inform them of your death or terminal illness diagnosis, they will not know what has happened and may send premium payment reminders. If you have already finished paying premiums and the policy is 'paid-up', the insurance company will assume that you are still alive unless a claim is made. If they have not received a claim and you are over ninety-five years old they may choose to check whether or not you are still in good health, but they are not required to do so. For these reasons it is important to inform a close relative or friend that you have purchased life insurance and explain that they will need to make a claim.
Once a claim has been made, the insurance company should process it as quickly as possible. If there is no named beneficiary who should receive the sum assured, the money paid to your survivors in the event of your death or diagnosis of a terminal illness, the money will be paid to your estate where it will be processed during probate. Probate is the term given to the administration of your affairs after you die, which usually involves determining the cause of your death and executing your Last Will and Testament. There are many formal stages involved, and if there are any complications then probate may take a long time to complete. However, you will be entitled to interest on the value of the sum assured earned between the date of death and the date of the pay-out if this period is over two months. If the pay-out is written 'in trust' then it will usually be executed quickly to allow the named beneficiary to benefit.
