How a Death Claim Is Paid in Canada

When someone you love has died, a life insurance claim is one more task on a hard list. It helps to know that it is mostly paperwork, and that the paperwork has a clear order. You tell the insurer about the death, ask what it needs for this claim, send it, and keep a record. In Quebec and British Columbia, the two provinces this guide covers in detail, the insurer then has 30 days to pay once it has received the proof the law requires. The clock starts with the proof, not with the death.

A few things can make a claim take longer: a death within two years of the policy's issue or reinstatement, a missing document, or two people who each believe they are entitled. None of them means the claim will be refused. Each one has a reason, a rule and a next step, and this guide takes them in the order you are likely to meet them.

Everything here is general information written by a licensed life insurance professional. It is not legal, tax or notarial advice, and Canadian Wealth Creation Centre Inc. is not authorized to give it. When a question turns on your own file, the guide says so, and the right person is a lawyer or, in Quebec, a notary.

What should you do first after a death?

Five steps, in this order. You do not need every document in hand before you begin.

1. Tell the insurer. Call or write to the insurance company, or to the representative who placed the policy, as soon as you reasonably can. You can do this even if you cannot find the policy or its number. Give the full name, date of birth and date of death of the person insured, and your relationship to them.
2. Ask for the claim forms and a written list. Ask what the insurer needs for this particular claim, where to send it, and whether it accepts copies or needs originals. A written list is the insurer's own record of what it asked for, and when.
3. Gather and send the documents. Proof of death, proof of your right to be paid, and the claimant's statement the insurer supplies. Send them together where you can, and keep a copy of every page with the date you sent it.
4. Ask for written confirmation that the file is complete. The insurer's 30 days run from the proof it needs. The date it considers the proof complete tells you when the clock started.
5. Follow up, and escalate if you must. If you hear nothing, write and ask what remains outstanding and why. If the claim is refused or seriously delayed, ask for the reasons in writing, use the insurer's complaint process, and speak early with a lawyer or, in Quebec, a notary, because a court deadline may already be running.

The Financial Consumer Agency of Canada gives the same first instruction: contact the insurer, or the agent or broker, as soon as possible (FCAC, how to make an insurance claim). If you believe a policy exists but cannot find it, look for annual statements and premium payments in the person's papers, and ask their accountant, notary or lawyer. The OmbudService for Life and Health Insurance (OLHI) also offers a search for a deceased person's life insurance policy, the service the FCAC points to when a policy is lost or old.

Does this guide cover all of Canada?

No. Life insurance contracts are governed by provincial law, and the legal detail in this guide comes from two places: the Civil Code of Québec, which governs insurance contracts in Quebec, and Part 3 of the Insurance Act of British Columbia. Every other province has its own Insurance Act, with its own section numbers and, on some points, its own rules. Ontario's Act, for example, is not examined here.

The practical steps travel well across provinces. The legal detail does not: the exact payment deadline, what starts it, who receives a share when a beneficiary has died, and how long you have to go to court. If you live outside Quebec and British Columbia, or the policy was issued somewhere else, ask the insurer which province's law it applies to the claim. Then ask a lawyer in that province before you rely on any rule below.

Read the table one row at a time. Each row answers a question that comes up at the start of a claim, and each cell points to the article or section behind it. The sections below take those rules one by one and say what each means for you in practice.

The texts are on LégisQuébec and BC Laws.

What proof does the insurer need?

Proof that the person insured has died, proof that you are the person entitled to be paid, and enough information for the insurer to find the policy. Each insurer's forms are built around those three things.

In Quebec, article 2436 of the Civil Code ties the insurer's duty to pay to its receipt of the proof required for payment. The article does not list the documents. In practice the proof of death is the act of death issued by the Directeur de l'état civil, or a death certificate. Some insurers accept a funeral director's statement or an attending physician's statement to open the file while the official document is on its way. The proof of your right to be paid is your identity where you are the named beneficiary, and the will or the document that names the liquidator where you claim for a succession. A will made in the testator's own hand or before witnesses is verified, at the request of any interested person, in the manner the Code of Civil Procedure prescribes (art. 772); a notarial will is not on that list. Before paying a succession, an insurer may therefore ask for the verified will, or the notarial will, with the liquidator's identification.

British Columbia is more specific. Section 73 of the Insurance Act requires the insurer to pay within 30 days after it receives sufficient evidence of four things: that the event making the money payable has happened, the age of the person whose life is insured, the claimant's right to receive payment, and the name and age of the beneficiary, if there is one.

Two different ages appear in that list, for two different reasons. The age of the person insured matters because a misstated age generally changes the amount payable rather than defeating the claim. The age of the beneficiary matters because a child cannot give the insurer a valid receipt for the money.

Notice the words "sufficient evidence". The legal test is the evidence the statute describes, not every item on an insurer's checklist, although the insurer's forms remain the usual and fastest way to provide it. Where an insurer accepts that the policy is valid and says the evidence is still not enough, section 78 of the British Columbia Act lets either side apply to the court, on notice, for a declaration on whether the evidence is sufficient, and section 79 lets the court order payment. A disagreement about completeness therefore has an end point.

A short checklist covers most claims:

What deadline does the insurer have to pay?

Thirty days after it receives the proof it needs, in both provinces. The day of the death is not the day the period begins. The period is counted from the file, so a claim that arrives incomplete has not yet started the clock, and a complete file sent in one envelope starts it sooner.

Article 2436 of the Civil Code of Québec binds the insurer to pay the sums insured and the other benefits the contract provides, according to its conditions, within 30 days after it receives the proof required for payment. The same article gives accident and sickness insurance 60 days, unless that insurance covers loss of income caused by disability.

Section 73 of the British Columbia Insurance Act requires the insurer to pay the person entitled within 30 days after it receives the sufficient evidence described above.

Illustrative example. Assume the death occurs on 10 January. You notify the insurer on 20 January and send the claim forms on 20 February, but the official death certificate is still on its way. It reaches the insurer on 3 March, and nothing else is outstanding. The 30 days are counted from 3 March: 28 days take you to 31 March and two more to 2 April, which would be the latest payment date under either statute. If the insurer later asks for one more document, whether that request moves the start date depends on whether the document was part of the proof the statute requires. That is exactly the question to put to a lawyer or notary if the delay becomes long. The dates are illustrative only.

On interest, the statutes say less than people expect. The insurance articles of the Civil Code that this guide reads do not set a rate for a late payment. In British Columbia, section 85 of the Insurance Act deals with money an insurer holds under the contract at an agreed or declared rate, which is a different arrangement from interest for paying late. Whether interest is owed on a late claim, and from when, is a question for a lawyer or, in Quebec, a notary. If the insurer does pay interest, ask how it will report it for tax.

What deadlines apply to you as the claimant?

The insurer's 30 days is not the only clock. Two more bind you rather than the insurer.

The first is the contract's own notice requirement. Some contracts ask for notice of a claim, or proof of it, within a stated time. Read the claims clause of the contract, or ask the insurer in writing whether any time limit applies to this claim.

The second is the time you have to go to court if the claim is refused or not paid. This is the clock that can catch a family out, because it can keep running while letters go back and forth.

In Quebec, article 2925 of the Civil Code sets the general rule: an action to enforce a personal right, where no other period is fixed, is prescribed by three years. When that period starts on a refused life insurance claim is a legal question, and a Quebec lawyer or notary should answer it on your facts. The Autorité des marchés financiers (AMF) is explicit on one related point: its complaint process does not interrupt the prescription period for bringing a court action (AMF, making a complaint).

In British Columbia, the Insurance Act sets its own limitation period for an action to recover insurance money payable on a death. Do not wait to learn how long it is. Speak with a British Columbia lawyer promptly once a claim is refused or stalls, and ask for the exact date on which your period ends.

What is the two-year contestability period?

It is the stretch of time during which an insurer can still challenge the contract because of what was said, or left unsaid, on the application. Once the insurance has been in force for two years, both provinces close that door except for fraud.

Article 2424 of the Civil Code of Québec provides that, in the absence of fraud, a misrepresentation or concealment relating to the risk cannot ground the annulment or reduction of insurance that has been in force for two years. Inside those two years, a misstatement or an omission about the risk, even an innocent one, can allow the insurer to seek annulment or a reduction of the insurance. The second paragraph of the article leaves disability insurance outside the rule where the disability began during the first two years.

Section 52(2) of the British Columbia Insurance Act reaches the same place in its own words. Subject to the group insurance rule in subsection (3), where a contract, or an addition, increase or change referred to in section 51(3), has been in effect for two years during the lifetime of the person whose life is insured, a failure to disclose or a misrepresentation of a fact required to be disclosed by section 51 does not, in the absence of fraud, make the contract voidable. The words "during the lifetime" matter: a death in month twenty-three leaves the contract contestable.

The two years can start again. In Quebec, article 2434 provides that once a contract is reinstated, the two-year period in which the insurer may seek annulment or reduction for misrepresentation or concealment runs again, and so does the period of a suicide exclusion. In British Columbia, section 52(2) counts its two years separately for an addition, increase or change referred to in section 51(3). If the policy was ever reinstated, or increased after new health questions, tell the lawyer or notary who advises you.

In practice, a death inside the two years may lead the insurer to ask for the attending physicians' records and compare them with the application, and those records can take weeks to arrive. A review is not a finding. Being inside the two years does not, by itself, establish a misrepresentation or justify a refusal; the insurer has to identify a fact and show why it matters under the law and the contract. You can ask the insurer for a copy of the application and of the contract, so that you see what it is comparing. What counts as a misrepresentation, and what the insurer has to prove, is on the misrepresentation page.

What does the suicide clause actually do?

It limits, for a period, what the insurer will pay where the person insured took their own life. In Quebec the statute caps that period at two years of uninterrupted insurance. In British Columbia the statute makes the promise to pay enforceable and governs how a reinstatement resets the clause, but the period itself comes from the contract.

Article 2441 of the Civil Code of Québec provides that the insurer may not refuse to pay the sums insured because of the suicide of the insured unless it expressly stipulated an exclusion for that case, and that even then the exclusion has no effect if the suicide occurs after two years of uninterrupted insurance. The exclusion has to be written into the contract; silence favours the beneficiary. The article's second paragraph deals with an increase. A change that raises the amount of insurance is subject, for the additional amount only, to the exclusion originally stipulated, for a fresh two years running from the date the increase took effect. The original amount keeps its original date.

Section 56(1) of the British Columbia Insurance Act says that an undertaking, express or implied, to pay insurance money where the person insured commits suicide is lawful and enforceable. It sets no period. Section 56(2) deals with the interruption: where a contract provides that suicide within a period voids it or reduces the amount, and the contract lapses and is later reinstated, the period runs from the date of the latest reinstatement. Where a British Columbia contract states two years, that is a contractual term, and the contract has to be read, clause by clause, before anyone tells a family what to expect.

If a claim of this kind is refused, ask for the clause relied on and the reasons in writing, and take both to a lawyer or, in Quebec, a notary.

If you or someone you know is thinking about suicide, call or text 9-8-8, the 9-8-8: Suicide Crisis Helpline, available 24 hours a day, every day of the year.

What can delay a claim, and what can you do about it?

Most delays come from three places: the file itself, a disagreement over who is entitled, and a review of a recent contract. Each can be a genuine reason for more time. None of them makes every delay justified, and you are entitled to know which one is holding your claim.

The file comes first. A death certificate not yet issued, a claimant's statement signed by the wrong person, a claim for an estate made before anyone holds the document that names the liquidator or executor, or a policy nobody can identify: each one stops the clock before it starts. Both statutes count from receipt of the proof, not from the first telephone call. A family waiting for the Directeur de l'état civil is waiting for a government office, not for the insurer.

Entitlement comes second. Two people may each claim to be the beneficiary. A will may appear to change the designation on the insurer's file. A former spouse may still be named. In Quebec, a beneficiary can be designated in the policy or in another writing, including a will (art. 2446). A designation or a revocation binds the insurer only from the day it receives it, and a payment the insurer makes in good faith to the last person it knows to be entitled discharges it (art. 2452). So if a will changes a beneficiary, send a certified copy to the insurer without waiting. A Quebec divorce or annulment of the marriage, and the dissolution or annulment of a civil union, make any designation of the spouse as beneficiary lapse (art. 2459).

British Columbia's Act has its own rules on designations made in a will and on when an insurer is protected in paying according to its records, and a British Columbia lawyer reads them against your documents. Where claimants genuinely compete, the Act also lets an insurer that admits it owes the money apply to pay it into court, and the money then waits for the court rather than for the insurer. How a Quebec designation ranks against the insurer, and why the file governs, is on the designation page.

A recent contract comes third: a death inside the two-year period can bring the review described above. That is a reason for questions, not for silence.

Who receives the money if a beneficiary died first?

It depends on the province, on how the designation was worded, and on who owns the policy. The estate is not the automatic answer, and in British Columbia it is the last stop rather than the first.

In British Columbia, section 63(1) of the Insurance Act deals with a beneficiary who dies before the person whose life is insured, where neither the contract nor a declaration provides for that share. The share is payable to the surviving beneficiary, or to the surviving beneficiaries in equal shares if there is more than one. Only if no beneficiary survives is it payable to "the insured or the insured's personal representative". In that Act, "insured" is a defined term, and it does not always mean the person whose life was covered. Where the owner of the policy and the person insured are different people, ask a British Columbia lawyer who that is on your file before assuming the money goes to the deceased's estate.

In Quebec, article 2447 of the Civil Code presumes that a beneficiary designation is made on the condition that the beneficiary exists when the sum insured becomes payable. A beneficiary who died first therefore drops out. Where there were co-beneficiaries, article 2456 applies between them the Code's rules on accretion among particular legatees. Under those rules, a share that lapses accrues to the others when the property was left to them jointly (art. 755), and a gift is presumed joint when it is made in one disposition without setting each person's share, or in equal shares (art. 756). Whether your designation's wording meets that test is for a notary to say. Article 2456 also says that the rules on representation in successions do not apply to insurance, so a deceased beneficiary's children do not step into the share by operation of law. And where the person insured and a beneficiary die at the same time, or in circumstances that do not show who died first, article 2448 deems the person insured to have survived the beneficiary.

When nobody named is left, the money generally follows the contract back to its owner, and where the owner was also the person insured, that means the owner's estate, called the succession in Quebec. Article 2456 provides that insurance payable to the succession, or to the heirs, liquidators or other legal representatives of a person under a stipulation using those or similar words, forms part of that person's succession. Money in an estate waits for the administration, answers the estate's debts first, and can be reached by creditors that a named beneficiary might have kept out, as explained under what a creditor can reach.

If you own a policy, one form prevents most of this: a contingent beneficiary recorded with the insurer, named for the case where the first beneficiary is no longer living. Do not confuse it with the Civil Code's "subrogated policyholder", who is a person designated to become the owner of the policy when the previous owner dies. Recording a contingent beneficiary is a form, not a fee.

What if the beneficiary is a minor?

A child cannot give the insurer a valid receipt, so the law sends the money to an adult who can hold it for the child.

In British Columbia, the Public Guardian and Trustee explains section 88 of the Insurance Act this way. Where a trustee has been appointed for the child, the money is payable to the trustee in trust for the child. Where none has been named, it is payable to the Public Guardian and Trustee in trust, to hold until the child turns 19. An insurer that pays a trustee must give the Public Guardian and Trustee written notice within 30 days of the payment (Public Guardian and Trustee of British Columbia). Section 62 of the Act is the provision under which a trustee for a beneficiary is appointed, in the contract or by declaration, and a designation made without one leaves the public official as the default.

Quebec does not write a separate rule into the insurance chapter. A minor's property is administered under the rules of tutorship in Book One of the Civil Code. A sum insured payable to a child is received and administered by the tutor, usually a parent, with the supervision the Code attaches to larger amounts. A designation that names a child directly, without saying who will administer the money, is lawful. It is also the source of many of the questions a notary is asked later. The detail for both provinces is on a minor beneficiary and a beneficiary who cannot be found, and the contract mechanics underneath are on the Civil Code page.

What does the beneficiary actually receive?

The death benefit the contract provides, adjusted by whatever the contract says is added or deducted. The face amount on the first page is where the calculation starts, not always where it ends.

What can be added depends on the design. On a participating policy, coverage bought with past dividends, such as paid-up additions, is usually paid along with the base amount, and some contracts provide a final dividend at death, which is not guaranteed until the insurer declares it. What can be deducted is set by the contract: a policy loan and the interest owing on it, and a premium that was due and unpaid. A policy loan is an advance from the insurer; the interest is owed to the insurer, at a rate the insurer sets and may change, and whatever is owing at death comes off the death benefit. A lender that holds the policy as security under a collateral assignment recorded with the insurer may be paid what it is owed before the beneficiary.

Illustrative example. Assume a base death benefit of $250,000, paid-up additions providing a further $12,000 of coverage, a policy loan with interest owing of $19,200 in total, and one monthly premium of $300 due and unpaid at the death. The insurer would pay $250,000 plus $12,000, or $262,000, less $19,200, or $242,800, less $300, for a payment of $242,500. These are round numbers for the arithmetic, not any insurer's figures and not a projection of any contract. Your insurer's written settlement statement is the only figure that counts.

Ask for that statement before the payment is issued, with each line shown. Some contracts also let a beneficiary leave the money with the insurer under a settlement option instead of taking a lump sum; ask what options the contract offers and what interest, if any, they pay. Where a corporation owns the policy and is its beneficiary, the corporation receives the money, and what follows is covered under corporate-owned life insurance.

Is the death benefit taxable?

As a general rule, a death benefit paid because the person insured has died is not income in the hands of the beneficiary who receives it. That sentence carries conditions, and they are set out on the taxes on death benefits page: which provisions of the Income Tax Act apply, what happens to a policy loan outstanding at death, what a corporation may credit to its capital dividend account, and what an estate has to report. Quebec residents also deal with Revenu Québec, which administers Quebec's own income tax.

A delay, a payment into court or a payment to the estate does not turn a death benefit into something else. Interest the insurer pays on top of the benefit, or pays while money is left with it, is a separate amount; ask how the insurer will report it. And nothing an insurer writes in a settlement letter is a tax opinion. That opinion should come from a qualified tax professional, such as a Chartered Professional Accountant or a tax lawyer, with the contract and the return in front of them.

Where can you complain if a claim is delayed or refused?

Start with the insurer, in writing. Ask it to identify what is missing, or to give its decision and its reasons. Ask for its complaint process, and use it.

If the insurer does not answer within 90 days, or you are not satisfied with its final position, the OmbudService for Life and Health Insurance offers a free and impartial review of complaints involving life and health insurance companies (OLHI, complaints). The FCAC also points to OLHI, or to your provincial or territorial regulator, when an insurer's answer does not satisfy you.

In Quebec, the Autorité des marchés financiers receives complaints too. Its process starts with the firm: you raise the complaint with the insurer, which must acknowledge it and give its final response in writing. The AMF can then offer conciliation or mediation and examine the situation as part of its supervision. As noted above, that process does not interrupt the prescription period for going to court.

See a lawyer, or in Quebec a lawyer or notary, without waiting for a complaint to finish if any of these applies: the claim has been refused; the insurer has not paid well after it confirmed the file complete; two people claim the same money; or a court deadline may be close. A complaint is useful. It is not a substitute for protecting your deadline.

Questions to ask, and who answers them

No single person answers all of a claim. Put each question to the person who can answer it, in writing where you can, and keep the answers in one file.

Who this guide is for, and when to get help

It is written for a named beneficiary who wants to know what the insurer may ask for, for a liquidator or executor unsure whether the estate is the claimant, and for a policy owner who wants a future claim to go smoothly.

It does not replace legal advice when a claim has been refused, when two people claim the same money, or when a court deadline may be running. It does not give section numbers for provinces other than Quebec and British Columbia. And it cannot say what a particular contract will pay; only the insurer can, in writing. For a claim in progress, contact the insurer that issued the policy first.

Everything here is written by a person paid by commission from an insurer when a contract is issued, which is stated at the foot of every page. Insurance is insurance, it is not an investment, and a well-handled claim is what the contract was for rather than a reason to own one. The strategy practised here is the Canadian application of the approach known as The Infinite Banking Concept®, originated by R. Nelson Nash; the mark belongs to Infinite Banking Concepts, LLC, with which this practice has no affiliation. It is practised under the practice's own registered mark, Infinite Financial Sovereignty®, which describes the state of holding the highest practical level of control over the capital-flow function in one's own affairs, and a death claim that arrives clean is the last act of that control.