Clients ask detailed questions about premiums and almost none about claims. It is understandable — nobody buys insurance imagining using it. But the claims process is where the product either works or fails, and a few things about it are worth knowing while you are still healthy.
What actually happens
Notification. A beneficiary contacts the insurer, or contacts me and I handle it. There is no deadline pressure in most cases, though sooner is better.
Documentation. For a life claim: a certified death certificate, the claim form, and identification for the beneficiary. For critical illness: medical records confirming the diagnosis meets the policy definition. For disability: attending physician statements and often ongoing proof of continued disability.
Assessment. The insurer verifies the policy was in force, the event is covered, and — for claims within the first two years — that the application was accurate.
Payment. Straightforward life claims are commonly paid within a few weeks of complete documentation. Disability claims take longer to establish, because the insurer is assessing an ongoing condition rather than a single event.
The two-year contestability period
This is the provision worth understanding properly, because it explains most of what people have heard about denied claims.
For roughly the first two years a policy is in force, the insurer can investigate the original application and contest the policy if there was a material misrepresentation — something that would have changed the underwriting decision had it been disclosed.
After that period, the policy is generally incontestable for misrepresentation, with fraud being the usual exception. A policy that has been in force for many years is on very solid ground.
This is precisely why full disclosure at application matters so much. A smoker who applied as a non-smoker, or an applicant who omitted a condition to secure a better rate, may be creating a problem that surfaces at the worst imaginable moment — after they are gone and their family is depending on it.
Answer every application question completely and accurately, even where it costs you a better rate. A policy issued at a rated premium that pays reliably is worth infinitely more than a cheaper policy that gets contested. Insurance you cannot count on is not insurance.
Why claims are actually denied
Denials are less common than reputation suggests, and the reasons cluster into a handful of causes:
- Material misrepresentation during the contestability period — the largest single category.
- The event does not meet the policy definition — particularly with critical illness, where an early-stage cancer or a transient ischemic attack may fall outside the definition.
- An explicit exclusion applies — a condition excluded by rider, or a suicide within the initial exclusion period, typically two years.
- The policy had lapsed for non-payment. Mundane, avoidable, and more common than it should be.
Notably, insurers do not deny claims because the payout is large. Denials rest on specific contractual grounds, and insurers must be able to justify them.
Avoiding a lapse
The most preventable failure of all. A policy that lapsed because a payment was missed pays nothing, regardless of how many years of premiums came before.
Most policies include a grace period, commonly 30 days, and many can be reinstated within a window — though reinstatement may require fresh medical evidence, which is a problem if your health has changed.
Practical steps: pay by automatic withdrawal, tell the insurer when you change banks or move, and make sure someone in your household knows the policy exists. Which brings us to the most surprising problem in this whole area.
Unclaimed policies
A meaningful number of Canadian life insurance policies are never claimed — not because they were denied, but because nobody knew they existed. The policyholder dies and the family has no idea a policy was in place.
Insurers do not automatically know someone has died. The claim has to be initiated.
So: tell your beneficiaries the policy exists. Tell them the insurer's name. Keep the documents somewhere findable, and make sure the executor knows where. This costs nothing and it is the single most common reason coverage goes unused.
Keeping beneficiaries current
Beneficiary designations on a life policy generally override your will. An ex-spouse named on a policy from a previous marriage will usually receive the proceeds regardless of what the will says.
Review designations after any major life change — marriage, separation, divorce, a new child, a death in the family. It takes minutes, and the consequences of neglecting it are severe and irreversible.
What I do at claim time
This is genuinely part of the job. When a client dies, I help the family through the paperwork, chase the insurer, and translate what is happening. Families dealing with a death should not also be deciphering claim forms.
If you hold policies arranged elsewhere and your family would not know where to start, it is worth at minimum writing down what exists and where. I am also happy to review what you hold and tell you plainly whether it still fits.
