Clients unaware of bereavement benefits
Research from life assurer RGA shows consumers are unaware of entitlement to bereavement benefits with just 14% of UK adults aware of potential £2,000 tax-free lump sums.
Some 86% of respondents said they were not aware that if someone dies having paid National insurance contributions, then a spouse may be entitled to receive a one off tax free lump sum payment of £2000.
A further 85% of respondents said they were not aware that if someone dies having paid National Insurance contributions, then a spouse may be entitled to receive a taxable weekly benefit for up to one year from the date of their death.
And 83% of respondents said they were not aware that if someone dies having paid National Insurance contributions, then their spouse is entitled to receive a taxable weekly benefit for any children they have as long as they are also receiving child benefits.
The life assurance industry has made great strides in recent years in speeding up the death claims process and introducing procedures that allow policy proceeds to be released to the correct beneficiary as swiftly as possible.
However awaiting Grants of Probate or investigating disclosure can mean that it can be some weeks before payment can be made to the beneficiaries.
life insurance provision is often insufficient to meet all the financial needs of the bereaved family.
RGA has consequently warned advisers to tell clients who claim under a life assurance policy they may also be entitled to bereavement benefits.
Simon Grant, claims manager for RGA, said: “These figures confirm our initial fears that these benefits are simply unknown to most members of the general public.
“The death of a spouse is a life changing event with major emotional, practical and financial consequences.
“We will continue to work with our clients to advise customers of the existence of these potential benefits as part of the insurance death claim process.”
Helen Morris, technical claims manager for Aegon UK, added: “These findings underline why we need to build awareness of this issue.
“Aegon has developed a factsheet outlining these benefits which we send to life policy claimants. Since we launched this last month we have already received positive feedback from advisers.”
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