Avoid payout delays by choosing the right beneficiary on your life insurance

Lee Bromfield, CEO of FNB Life.

The process of taking up life or funeral insurance is often treated as a tick-box exercise and people overlook important factors such as selecting the right beneficiary. In most cases, nominated individuals are not even aware that they are beneficiaries on someone’s life or funeral insurance policy.

“The process of nominating a beneficiary needs to be taken very seriously because in the unfortunate event of the main member’s passing, the payout can only be made to the nominated individual,” says Lee Bromfield, CEO of FNB Life.

“If no beneficiary is listed, the funds are then paid into an estate and that can delay the money going where it is most needed. This could even have unintended consequences such as delaying funeral arrangements until the family can secure alternative sources of funding. In certain cases, we see family members who are not beneficiaries trying to lodge a claim, and by law, insurance providers are not allowed to payout to someone who is not listed as a beneficiary.”

Bromfield says there are a number of factors you should consider when selecting a beneficiary on your life or funeral insurance policy:

Nominate someone you TRUST

You need to trust the person you nominate, especially in cases where the payout needs to be used for an important purpose such as a burial. Remember that once your insurance provider pays-out, they have no control over how your beneficiary uses your insurance money.

Maintain your beneficiary list

Insurance providers do allow amendments of beneficiaries; therefore, you can change beneficiaries on your insurance policy.

Inform your beneficiary

When taking up a funeral or life insurance policy, consider informing the nominated beneficiary so that they are aware of their responsibility. This is significant because should you pass away, the claims process becomes a lot faster as the beneficiary knows what they need to do.

“Even though we cannot influence a policy holder’s decision on selecting a beneficiary, we are increasingly educating our clients about the role of a beneficiary and the need to take this process very seriously,” concludes Bromfield.