Coach clients through death claims

While a death benefit may seem like a blessing when a loved one dies, filing a claim to receive that benefit can be a daunting task during the grieving process.

That’s why the claims process should start while the client is still alive, says Elke Rubach.

“We meet the [client’s chosen] beneficiary and make sure they understand what’s coming,” says Rubach, principal at Rubach Wealth in Toronto. “We explain that this has been set in the way it has because the owner of the policy wants things to happen that way.”

Rubach adds during that meeting, she hands the client a binder that summarizes all of their policies, and suggests he let the beneficiary know where to find it upon the client’s death. “They have a list in one place, including company names, account numbers, owner and beneficiary.”

There can be instances, however, where an advisor hasn’t met the beneficiary. Rubach recalls that when she acquired another advisor’s book, one of the clients died before she got the chance to meet him and his beneficiary.

“I didn’t get to have the conversation,” she says, making the first contact more startling. Instead, “we had a conversation saying, ‘Hello Ms. X, you don’t know me but my name is Elke Rubach. I am the person looking after your parents’ life insurance policies. I’m very sorry for your loss and would have much better preferred to have met you in different circumstances. Is this a good time to talk?’”

In these situations, Rubach suggests explaining the steps to file the claim and offering to meet in person if the beneficiary wishes.

In cases when you’ve already met the beneficiary, he may call you when his family member or friend dies. Hearing of a client’s death can be hard on the advisor, too. But as Nathan Osterhout, financial advisor at Edward Jones in Edmonton, notes, it’s important to take your cues from the beneficiary.

Osterhout recently had a client of 20 years die unexpectedly. “We were all still upset,” he says. “But the son is very direct, and didn’t respond to some of my fond stories of his father. I have to be very collected with him because that’s what he wants.”

In any case, Osterhout prioritizes minimizing the beneficiary’s work. “We need the date of death, cause of death, funeral name and phone number from the beneficiary, and we’ll do the rest.”

He calls the insurance company and completes the death claim notification over the phone. He then asks beneficiaries whether they want the claims department to send them the paperwork, or if they’d rather it be sent to his office. “They usually want it sent to us so it’s less complicated,” Osterhout says.

He then meets the beneficiary and completes the death-claim paperwork, and submits it to the insurance company. He tells the beneficiary it should take two to four weeks for the cheque to arrive.

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Special considerations

Many of Elli Schochet’s clients are Jewish, so he considers their beliefs when someone calls to file a death claim.

“We’ll let them know we’re there for them, and when they’re ready we’ll be in touch to complete the forms,” says Schochet, partner at Al G. Brown & Associates in Toronto. “We’ll generally wait until after the Shiva period, which is seven days of mourning, unless they ask us to meet right away.”

Schochet’s firm is also proactive, and will check local Jewish funeral homes to see if clients have died. “We have someone who checks their websites on a regular basis to make sure we don’t miss anything.”

And upon learning of a death, his firm will untag the client from the CRM system. “We have a lot of communication with clients—birthday cards, newsletters. We want to make sure that as soon as someone passes away, the family is not going to get a birthday card or call because that just pours salt on the wound.”

Various policies

While the process to file a death claim is the same no matter what type of policy the client has—term, whole life (WL) or universal life (UL)—there are nuances for WL and UL.

“When you wind down a term policy, it’s simple because there’s no investment aspect, and you get paid whatever it says,” says Osterhout. “For WL and UL, the amount of the death benefit is set in stone. But there’s also the investment portion that gets paid out.”

With WL policies, clients are participating in the insurer’s pool of assets. There isn’t much swing in the investment portion because insurers try to smooth returns, he explains. “What they’re doing is taking some of the highs out and giving it to some of the lows.” As he explains it to clients, “Basically they may not return some money in the good times and return more when the bad times happen.”

Meanwhile, he makes sure clients and beneficiaries understand that UL policies are susceptible to market swings. “If it’s a GIC investment in the UL policy, there’s no market movement,” adds Osterhout. “If it’s a bond, it could have small movement. A stock could be up and down like a yo-yo. If someone passes away at the wrong time, it could diminish the total investment payout. But the death benefit will never be diminished.”

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Delayed payment

There are several factors that can delay payment. If the beneficiary doesn’t have the death certificate, the certificate is missing information, or if it is a copy as opposed to an original, the payout could be delayed by up to five days, notes Osterhout.

Another factor is if the client dies within the two-year contestable period. “There may be an investigation by the insurance company,” says Schochet. “We will do whatever we can in these circumstances to make the process as smooth as possible. At times, this means providing the insurance company with additional information, which may help the claims process.”

Outside of the period, Schochet adds there have been instances where the insurer wants a doctor’s report. “If the request is unjustified, we’ll try to see if we can get them to waive it.”

For instance, his firm handled a claim where the policy had been in place for 20 years. “It was a small amount, and the gentleman who died was older. We called the insurer and explained these details and asked if they could waive the requirement, which they did.”

Osterhout adds that when beneficiaries are grieving, they sometimes won’t return calls or meet to sign forms, which can also delay payment.

“The claim can be so easy if the steps are followed,” he says. “It only becomes difficult if beneficiaries don’t understand all the facts ahead of time.”