How Do Life Insurance Claims Work in Canada?

Key takeaway

To file a life insurance claim in Canada, the beneficiary contacts the insurance company, submits a death certificate and completed claim form, and provides proof of identity. Most claims are processed and paid within 30 to 60 days. Claims are rarely denied — but when they are, the most common reasons are material misrepresentation on the original application during the two-year contestability period, or an excluded cause of death.

Step 1: Locate the policy and contact the insurer

The first step is finding the policy document or at least the policy number and insurer name. Check the deceased's files, email, bank statements (for premium payments), tax returns (insurance premiums may appear), or contact their insurance advisor.

If you cannot find the policy, contact the CLHIA's Canadian Life and Health Insurance OmbudService, which can help identify whether a policy exists. Your provincial insurance regulator may also assist.

Step 2: Gather required documents

The insurer will require: a completed claim form (provided by the insurer), the original or certified copy of the death certificate, the policy number, proof of the beneficiary's identity (government-issued photo ID), and the beneficiary's banking information for direct deposit.

If the death was accidental, the insurer may request a coroner's report or police report. For deaths outside Canada, additional documentation such as a consular death certificate may be required.

Step 3: Claim review and processing timeline

After receiving all documents, the insurer reviews the claim. For straightforward claims outside the contestability period, processing typically takes 30 to 60 days. Many insurers pay within 2 to 4 weeks for uncomplicated cases.

If the death occurs within the two-year contestability period, the insurer has the right to investigate the original application for material misrepresentation. This can extend the process to 60 to 90 days or longer.

Common reasons claims are denied

The most common reason is material misrepresentation on the application — for example, failing to disclose a serious pre-existing condition, smoking status, or dangerous occupation. This only applies during the contestability period (first two years).

Other denial reasons include: an excluded cause of death (suicide within the policy's exclusion period, typically 2 years), lapsed policy due to non-payment of premiums (even a 31-day grace period expiry), and fraud (intentional falsification of the application).

After the contestability period, claims can only be denied for fraud or non-payment. The insurer cannot retroactively deny a claim based on health information that was unknown at application time.

How the payout is delivered

The beneficiary can typically choose between a lump-sum payment (most common), installment payments over a period of time, or an annuity arrangement. The lump sum is paid tax-free to the named beneficiary and bypasses the estate — meaning it is not subject to probate fees.

If no beneficiary is named or the beneficiary predeceased the insured, the death benefit is paid to the estate and becomes subject to probate fees (1.5% in Ontario on amounts over $50,000) and potential creditor claims.

What to do if a claim is denied

If a claim is denied, request a written explanation from the insurer detailing the specific grounds for denial. Review the denial against the policy terms and the original application.

You have the right to appeal through the insurer's internal dispute resolution process. If that fails, the OmbudService for Life & Health Insurance (OLHI) provides free, independent dispute resolution. Provincial regulators like FSRA in Ontario can also investigate. As a last resort, legal action through the courts is available.

Frequently asked questions