Clients unaware of state bereavement payments

Grieving clients could be missing out on thousands of pounds worth of state bereavement benefits, RGA has said.

The reinsurer has raised concerns that advisers and their clients may not be aware of the support available to people dealing with the loss of a loved one.

It noted that while the life assurance industry has made great strides in recent years in speeding up the death claims process, many customers experience a period of financial hardship whilst life assurance claims are being processed.

As part of the process of raising awareness, insurer Aegon has announced it will be sending out a guide with all new death claims to help policyholders understand the financial support available from the State.

"Many individuals claiming under a life assurance policy may also be entitled to Bereavement benefits available from the State that could potentially ease some of the financial strain in the early days following bereavement, and beyond," RGA said.

"However, the existence of these benefits is not necessarily common knowledge across financial advisers, insurance companies and the general public.

"As a result we are seeking to draw attention to the benefits as well as the current Department for Work and Pensions (DWP) consultation regarding ‘Bereavement Benefit for the 21st century' which closes on 5 March 2012," it concluded.

Simon Grant, UK claims manager for RGA, continued: "We are concerned that these benefits are often overlooked by both consumers and advisers.

"If your husband, wife or civil partner has died you may be able to get Bereavement Payment, a one-off, lump-sum payment of £2,000 that's tax-free.

"There are certain age limits and eligibility criteria, but these benefits are not means tested and the State claim to be able to make payments promptly to those who are entitled.

"We intend to carry out further research in the near future and will report the results accordingly, but in the meantime we encourage financial advisers to check the information available online from the DWP and respond accordingly to the consultation document."

The benefits available following breavement are:

• Bereavement Payment: a tax free lump sum payment of £2,000. Recipients must be under State Pension Age, and the deceased spouse or partner must have made National Insurance contributions, and was not entitled to a Category A state retirement benefit when they died,

• Bereavement Allowance: a taxable weekly benefit of up to £100.70 per week paid for up to 52 weeks from the date of death. Recipients must be over age 45 but under State Pension Age, with no dependent children, and the deceased spouse or partner must have made National Insurance contributions or died as a result of their job,

• Widowed Parents Allowance: a weekly benefit of up to £100.70 a week. Recipients must be bringing up a child or children under age 19, under State Pension Age, and the deceased spouse or partner must have made National Insurance contributions or died as a result of their job,

• Funeral payment: a payment of up to £700. Recipients eligibility will be subject to means testing, and will depend on the relationship with the person who died.