Taking care of the people we love is at the core of most of what we do. More so, if you have had a baby, gotten married, or just looking for ways to protect your family members financially.
There will come a time where you will sit across from a financial advisor or speak with an insurer on the phone to find out more about how you can create a financial safety net for your loved ones.
Adding a beneficiary seems straight forward. However, it is something that tends to stump many people when applying for life insurance cover. Here is what you need to know when adding a beneficiary to ensure that your loved ones are adequately covered.
What is a beneficiary?
A beneficiary is someone who will receive the payout from your life insurance policy if you die. It is a lump sum payment that can go up to R5 million to help them sustain themselves. It is essentially a financial safety net that gets paid out to the person you nominate as a beneficiary. The payout can be used to take care of daily expenses, any debt you may have left behind, funeral expenses, and educational costs. To do this you will need their ID number, phone number, email, first and last name.
Who can you add as a beneficiary?
You can choose to add a beneficiary at the inception of your policy. Life insurance has also been designed to keep up with the stages of your life. Should you have a child later in life, get married, or divorced you can update your life cover accordingly. You can add your parents, your spouse, your child, extended family members, or a close friend that you trust. However, it is important to ask your insurer if your premiums will increase for adding each beneficiary.
What if I have multiple people who are financially dependent on me?
Insurers understand that you are different from your neighbour. Therefore, they have designed policies to fit like a glove when it comes to getting cover that adequately covers your needs. It is also why premiums tend to differ based on your age, health, occupation, or the number of people you want to cover.
You can get access to life insurance policies that come with added benefits such as being able to cover wider members of your family for funeral cover that starts at R10 000 up to R50 000 under one premium. It’s possible to cover more than one person under your policy. For example, if you want to cover your partner and your two children, you can split the payout three ways. This means that if you are insured for R5 million in cover, they will each receive R1 666 666 million. Always remember to check the waiting period and exclusions that come with your cover.
What if the beneficiary I have listed has passed on before the policy is paid out?
Unfortunately, the downside to life is dealing with the loss of someone that you love and care about. Therefore, insurers have made it possible for you to update your policy to ensure that the right people get the payout without any complications. If someone has passed on you can remove them from your cover.
What to remember is that listing a beneficiary and informing them is important. Keep the information on your policy updated to make it easier for your loved ones and insurers to have a claim process that is smooth, so they can live life their way.