Understanding the terms and conditions that come with your life insurance policy can make it easier for you and your loved ones when it is time to claim. A trustee and beneficiary are two different things that can affect your policy. Can a trustee be a beneficiary? Here is what you need to know.
What is a trustee?
A trustee is someone you have chosen to entrust with an asset or a policy. It could be in the form of an executor of a will, a financial institution, a trusted family member or friend. They are the ones who will make sure that whatever asset or policy you will leave behind when you die is handled correctly and given to the right people.
What is a beneficiary?
Beneficiaries are crucial to any life cover. Choosing a beneficiary/s who will receive the life cover payout will ensure that the safety net that you worked so hard for doesn't go unclaimed. A beneficiary is someone you choose to receive the payout of a policy you have taken out. In cases where there are more than one person you would like to choose to benefit from your policy or trust fund, you can choose to split it in a way you see fit. For example, you can choose to have a R5 million life cover payout split 50/50, 20/20/60, or 100% of the payout can go to one person.
Can a trustee be a beneficiary?
A trustee can be a beneficiary if the policyholder chooses to add them as a beneficiary. However, a policyholder is under no obligation to add the trustee as a beneficiary. There may be instances where you will need to prove insurable interest, but in most cases, a trustee can be a beneficiary.
Other things to consider
Your life cover is created to adapt with you as you grow. It also means that you can add and remove beneficiaries to keep your policy up to date to make sure that the right people end up benefiting from a financial safety net you have worked so hard to create. When adding beneficiaries to your policy, keep in mind that you will need their I.D numbers to add to your policy to make it easier for your insurer to contact them.
