When creating something as special as life cover that will benefit you and your loved ones, it is crucial to have a beneficiary/ies who will benefit from this cover.
This can be anyone who you choose to receive your life insurance payout. But what happens if you don't choose a beneficiary?
The unclaimed billions
There is an estimated R17.1 Billion in unpaid policies that are still waiting to be claimed. While the intention may be good to open a unit trust or life insurance policy that will protect your loved ones, not adding a beneficiary can make it harder for insurers to track down the right people who should benefit from your policy.
Furthermore, not telling a trusted person about your policy/ies can cause it to sit with an insurer, unclaimed. To date, there are almost 150,000 policies and unit trusts that have remained unclaimed. Financial companies persevered and have managed to trace owners of some of these unclaimed policies and investments, but these efforts have only equated to a value of R8.1 Billion.
What do financial companies do with unclaimed money?
Life insurance policies, funeral policies, and unit trusts created by financial providers are obliged to keep their promise of paying out the beneficiaries. They are obliged to search for the investors or beneficiaries for at least three years before they can list it as unclaimed. However, if a beneficiary has passed on or moved abroad without alerting the company it can make it difficult for the claims process to run smoothly.
What if you don’t have a beneficiary you can list?
Life insurance is flexible and created to grow with you. Not having someone you can list when taking out a policy is common, which is why you can always come back to update your policy at a later stage. Updating your policy frequently is encouraged.
Being able to adapt your policy according to your life stage such as getting married, having a child, becoming the sole breadwinner for your family, or taking care of family members makes it easier for you to keep your policy up to date even if you currently don't have anyone to list as a beneficiary. It is also possible to list a charity as a beneficiary to receive your life insurance payout if you do not have any loved ones.