Why Nominating Funeral Insurance Beneficiaries Is Important

It's all very well having a comprehensive funeral insurance policy in place, but did you know that if you don't nominate beneficiaries, the right people may not get the funds they really need when you pass away? This will mean that they may not be able to afford to pay for your funeral and their finances may become strained.

If you as the main member don't nominate an insurance beneficiary and the time comes for a claim to be submitted, the policy defaults to the first qualifying person on the list below: 

1.  a partner insured under the policy; then
   
2.  an adult child insured under the policy; then
   
3. a parent insured under the policy; then
   
4. a partner not insured under the policy; then
   
5. an adult child not insured under the policy; then
   
6. a parent not insured under the policy.
   

If none of the people on the list above is eligible, the proceeds will be paid to your estate. The problem with this is that the money can then become tied up for an extended period of time, while your funeral needs to be organised and paid for immediately.

Another problem you may have if you don't nominate or update insurance beneficiaries is that the wrong person may end up getting the money. You may get divorced but forget to change the beneficiary details in your funeral insurance policy. When the time comes for a claim to be submitted, your former spouse can claim the money. This could be a problem, as one of your children may be organising your funeral, desperately needing the funds.

Another important thing to note about funeral insurance beneficiaries is that, where a domestic worker is included under a policy, the main member cannot be the beneficiary. The default beneficiary is the domestic worker's estate or a nominated beneficiary and he or she will receive a benefit statement showing this. 

Also, please bear in mind that all funeral insurance claims are paid out in South African rand and into a South African bank account. 

Now you should realise why listing beneficiaries on your funeral insurance policy is so important. Without this listing, the people you would like to have as beneficiaries under the policy may miss out and this could cause financial problems for them while they are dealing with the stress of your death.