Your quick and easy guide to choosing the right policy beneficiary

You’ve taken out a 1Life Insurance policy to ensure your loved ones have funds when they need them most, to cover immediate funeral expenses and to create wealth for your children and theirs for generations to come. To make sure that the pay-out for a valid claim changes your family’s lives for the better, you need to choose the right beneficiary! We’ve got you covered! Our quick six-point guide will help you make this important decision.

1. You can name only one beneficiary on your funeral policy

The beneficiary will receive the proceeds from a pay-out for a valid claim when the main member passes away. If additional members are insured on the policy, pay-outs for valid claims on their passing are paid to the main member.

2. You can name more than one beneficiary on your life policy

Your 1Life Insurance life cover policy allows you to name one, or more beneficiaries, to receive the pay-out for a valid claim. You can specify, for example, that your spouse receives 50% of the pay-out for a valid claim, and your two children 25% each, or you can allocate a certain amount such as R500 000 to your spouse and R100 000 to your sister. If multiple beneficiaries are nominated and no amount or percentage specified, each beneficiary will receive an equal share.

3. Naming a minor as beneficiary can cause problems, including delays in pay-outs for valid claims

According to South African legislation, minors (anyone under 18 years of age) cannot take possession of an inheritance until they turn 18. If your children are under 18 years of age, and you name them as beneficiaries on your life policy, or funeral policy, they cannot be paid the money.

What happens if you name a minor as a beneficiary on your funeral policy?

The pay-out for a valid claim will be delayed, for months and more! Which means paying for the funeral will become a problem. If you have named a minor as the beneficiary on your funeral policy - change it.

What happens if you name a minor as a beneficiary on your life policy?

Insurance companies only have two options for the pay-out of a valid claim if the beneficiaries are under 18 years of age:

• Pay the proceeds into a trust set up for the minor(s): If the life assured set up a trust in their will to manage funds for their children until a certain age (18 years or older), the proceeds can be paid into the trust and expenses such as school fees will be paid from the trust. You can read more about setting up a trust for your children in your will in this blog. A financial adviser or fiduciary expert can help you draft your will and trust deeds.
• Pay the proceeds into the Guardian’s Fund: If the will of the life assured makes no provision for a trust, the proceeds have to be paid into the Guardian’s Fund, which is administered by the Master of the High Court. Only some expenses can be paid up to a certain amount, and the funds are paid to the child or children when they turn 18 years of age.

You can also nominate a guardian as a beneficiary, or a trusted adult such as a grandparent or an aunt or an uncle, to receive the money if you are sure they will use the proceeds to care for your children.

4. You must give your beneficiary’s personal (ID, full name) and contact details (email, cell number)

This is to ensure your insurance company can contact them, and more importantly pay the right beneficiary! Naming John Khumalo as your beneficiary without an ID number could mean the wrong John Khumalo ends up getting paid!

5. Your beneficiary must have a valid South African bank account

1Life Insurance pays proceeds from valid claims into South Africa bank accounts only, so if your beneficiary resides in another country, they will need to open a South African bank account to receive the money.

6. You must tell your beneficiary, or beneficiaries, that they are a beneficiary

Did you know that there was R33.5 billion in unclaimed policies in South Africa at the end of 2021? A lot of policies don’t get to change their loved one’s lives because beneficiaries don’t know there is a policy, so they don’t claim! Don’t let this happen to your family. Talk to your beneficiary, tell them you have a policy and what the policy covers, and ensure they know how to claim! 1Life Insurance’s Beneficiary Instruction Sheet has details on the claims process and will ensure your beneficiary knows how and when to claim.

You can also share ideas on how your beneficiary can spend the policy pay-out to change your family’s lives. This blog can help you with this conversation.

Update your beneficiary details today

You can access and update your beneficiary details on the 1Life Insurance online policyholder services portal, or check your beneficiary details on the 1Life Insurance WhatsApp service centre. You can also contact 1Life Insurance and speak to a skilled consultant who can help you change or update your beneficiary details.

Make sure your beneficiary and your family benefits

Your beneficiary is ultimately responsible for ensuring your loved ones benefit from your policy! Name the right beneficiary and they will! Follow the dos and don’ts above, and your family’s lives can be changed for the better!

Bonus point! Who is a suitable beneficiary for a life insurance policy?

We want to empower you to choose the right beneficiary for your policy. Suitable beneficiaries should know you and your family, why you took out life insurance and how to use the pay-out. They may be a spouse, partner, or close relative.

 In addition, suitable beneficiaries are:

Responsible and trustworthy

You are trusting your beneficiary to act according to your wishes, so you need to know that they are responsible individuals who will spend the money as you intended.

Money savvy

A suitable beneficiary will be good with money, and ideally have a track record of managing money well.

Well supported

Suitable beneficiaries will use financial advisers to help them manage finances responsibly. Life insurance pay-outs are usually large amounts, and your beneficiary will need help investing the money so that it can be used as you intended.