KEEP UP TO DATE WITH ALL THE IMPORTANT COVID-19 INFORMATIONCOVID-19 RESOURCE PORTAL
FANews
FANews
RELATED CATEGORIES
Category Life Insurance

Leaving the ultimate legacy to beneficiaries

14 June 2022 Momentum Life Insurance

The world is learning to live with the decreasing threat of COVID-19, but that shouldn’t make anybody complacent, especially when we have learned the powerful lesson of ‘anything can happen at any time’.

It is not only important that you are prepared and equipped with the right insurance cover, but when it comes to life cover, that your beneficiaries are prepared as well.

According to Jenny Ingram, Head of Product Development at Momentum Life Insurance, the industry has been paying out record amounts of claims over the past two years. “We have all been reminded that life insurance is only as good as the preparation that goes into it. We have come across many policies with out-of-date or no beneficiaries.”

Ingram says this only serves to delay the claims process and leads to unpaid loved ones who rather want to grieve in their time of pain. “We urge policyholders to do their best to ensure that they leave their loved ones in a good position. It may seem cumbersome, but you would be surprised at how many clients have simply forgotten to do this, even when their lives have changed drastically in the interim.”

With an inordinate level of uncertainty that has swept over us all like a tidal wave of unpreparedness, Ingram says it is understandable that seemingly important financial matters are often forgotten. “Most people are scrambling to keep their heads above water, and often forget to keep their financial affairs such as the correct beneficiaries on life cover policies up to date.”

Why is it important to ensure that your beneficiary nominations are in place and up-to-date?
According to Ingram the three most common issues they come across in the claims environment, with regards to beneficiary nominations and the unintended consequence, are as follows:

Firstly, policies with no beneficiary nominations – in the event of no beneficiary nominations the payment will be made to the estate of the deceased policyholder. The problem here is that an insurance company can only pay the claim once the estate is registered, an executor has been appointed and a bank account opened. After the insurer receives all the associated documentation they will be able to pay the claim – which cause lengthy delays and often creates unintended financial consequences for the dependents of the policyholder.

A second scenario we are often faced with, is dependents attempting to change the beneficiary on a policy after the policyholder’s passing. We cannot do this after the death as we are legally bound to pay the nominated beneficiary on record at the time of death.

Lastly, if the beneficiary is a trust or where the policy has been ceded, there are a host of other documentation needed before we are allowed to pay the claim. As an example, in the event of a cession we require the bank to provide us with the debt value and banking details before we can finalise the claim payment.

At the end of the day (and of life), she says a life insurance policy reflects the kind of legacy one wishes to leave behind. “Beneficiaries are not simply legal check boxes; they are loved ones, family, friends and business partners. When discussing the appropriate life cover options with your financial adviser always ensure that the correct beneficiaries are recorded – especially when your legacy and loved ones’ futures are at stake.”

Quick Polls

QUESTION

We have watched with interest as each of the country’s large life insurers report their 2021 life claims statistics, with soaring claims and claims values. That got us thinking: how do the big life insurers compare against one another, from an IFA perspective?

ANSWER

An insurer is an insurer is an insurer
All are excellent: would not deal with them otherwise
There is one insurance brand that stands out for me
Tied agent: but my brand is the best out there
fanews magazine
FAnews June 2022 Get the latest issue of FAnews

This month's headlines

A free smoothie does not make a loyal customer
Consequential loss policy court cases
Everything you need to know about death, disability and severe illness cover post-emigration
Are advisers doing all they can for clients’ portfolios?
Financial advisers need help - navigating the complex ESG fund environment
Subscribe now