What is the typical payout timeline for key person insurance claims?

Key person insurance claim payout timelines in Australia vary significantly depending on the claim type and complexity. Death claims are typically the fastest to process, usually taking 4 to 12 weeks from lodgement to payment, provided all required documentation (death certificate, coroner's report if applicable, completed claim forms, and business verification) is submitted promptly and there are no complications. The process is relatively straightforward as the event is clear and medical uncertainty is minimal. Total and Permanent Disability (TPD) claims take considerably longer, often 3 to 6 months or more, because the insurer must obtain comprehensive medical evidence from multiple specialists confirming the disability meets the policy definition and is permanent. The assessment requires detailed medical reports, functional capacity evaluations, and sometimes independent medical examinations arranged by the insurer. Trauma or critical illness claims typically take 6 to 12 weeks, depending on how clearly the diagnosis meets policy definitions and the quality of medical documentation provided. Factors that can delay claims include: incomplete or missing documentation requiring follow-up requests; complex medical situations requiring additional specialist opinions; circumstances requiring investigation (such as non-disclosure concerns or unusual death circumstances); disputes over whether the condition meets policy definitions; and administrative delays during peak claim periods. To expedite the process, businesses should notify the insurer immediately when a claim event occurs, engage professional advisers to manage the claim, provide all requested documentation promptly, and maintain regular communication with the insurer. Some insurers offer advance payment options for urgent needs while the claim is being assessed.