Nominating Beneficiaries to Get Benefits into the Right Hands
July 7, 2018
When you pass away, if you are wealthy, there will be some people, particularly family members clamouring for the wealth you amassed. It is far better for you to go about nominating beneficiaries before you die.
You name the people in your will who are to benefit from your wealth after you have gone.
Nominating a beneficiary will require consideration, and you will certainly want to think about the beneficiary’s ability to handle a large amount of money they are about to receive.
Beneficiaries are the people who will receive the money from the funeral policy if something happens to you. The beneficiaries don’t have to be a family member – they can be a trust, a charity, your pet, an organisation, a group of people or your estate.
Make Sure to Designate a Beneficiary
With a funeral policy, it is no different to any other insurance. If you have a comprehensive funeral insurance policy in place, if you don’t nominate a beneficiary, the right person won’t get the funds. They may not be able to afford to pay for your funeral.
After taking out a funeral policy, you will be able to designate a beneficiary. If the primary member doesn’t nominate a beneficiary, the policy defaults to the first qualifying person. This might be a child, parent or partner.
If none of these people is eligible, the insurer pays the proceeds to your estate. This will be a pity because your money can become tied up for some time. It can be frustrating when you are a family member who could use the money to arrange a funeral.
Make sure the Wrong Person doesn’t get their Hands on your Money
It can be dreadful when you don’t nominate a beneficiary, and the wrong person ends up getting the money. As a divorcee, imagine forgetting to update your funeral policy. Your ex-spouse, whom you detest, could end up getting the money.
You can nominate anyone to be your beneficiary – even a child. In South Africa, a child under the age of 18 is considered to be a minor – a child. The law in South Africa prevents insurance companies paying the proceeds of a policy directly to a child who isn’t yet 18.
The money must be paid into a trust where it will remain until the child turns 18. Clientele Funeral Cover makes provision for this. They have their ‘Fairheads Trust’ who will administer the trust together with the child’s legal guardian.
Nominating Beneficiaries more than once
Some people panic because a change in circumstances may mean they want to make changes to their funeral policy and change the way they have been nominating beneficiaries in their will. If you want to change your current beneficiary nomination, you can.
All this is required is for you to make known your request in writing so that records exist. That is why it is a good idea to review your funeral policy from time to time.
Events and feelings change and the beneficiary you chose at a particular stage of your life may be the very last person you would now choose. The primary purpose of funeral insurance is peace of mind, but having your money fall into the hands of the wrong person is cause for you to turn in your grave.
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All info was correct at time of publishing