Your BrightRock life policy serves as a financial safety net, ensuring that your loved ones are provided for when they need it most.

That’s why it’s so important to nominate your beneficiaries when you take out a policy. This will streamline the claims process and alleviate potential stress for your family during an already challenging time.

With that in mind, let's answer some common questions you may have about life insurance and your nominated beneficiaries.

Who can be a beneficiary on my policy?

You can nominate any individual or entity as a beneficiary on your life insurance policy.

While it’s common to choose those who are financially dependent on you, such as a spouse or children, you can also designate friends, relatives, trusts, or charitable organisations.

Can I nominate a minor as a beneficiary?

Yes, you can, but it’s essential to understand the legal implications. Minors, individuals under 18 years old in South African law, do not have the contractual capacity to manage assets without a guardian’s assistance.

If a minor is named as a beneficiary without proper arrangements having been made, the policy proceeds may be directed to the Guardian’s Fund, a state-run entity, until the child reaches adulthood.

To ensure that minors benefit directly from life insurance proceeds, it’s best to set up a trust. There are two primary types:

• Testamentary Trust: Established upon your death, as specified in your will.

• Inter Vivos (Living) Trust: Created during your lifetime.

By directing life insurance payouts into a trust, appointed trustees can manage the funds in the best interests of the minor, until they reach legal age.

Can I update my nominated beneficiaries?

Life is dynamic, and your relationships and circumstances may change. It’s therefore a good idea to review your beneficiary designations on a regular basis and update them if necessary.

This is especially so after significant life events such as marriage, divorce, the birth of a child, or the death of a previously named beneficiary.

This ensures that your life insurance aligns with your current intentions and family structures.

What are the consequences of not naming a beneficiary on my policy?

If you don’t designate a beneficiary, the death benefit from your life insurance policy typically becomes part of your estate.

That means all the money and possessions, including debts, that are left behind. After a person dies, their estate has to be wound up. All debts must be paid off and all assets must be distributed to the people named in their will.

If a person doesn’t have a valid will, their assets will be distributed in terms of the Intestate Succession Act 81 of 1987.

What happens if the money from a life insurance policy is paid into a person’s estate?

In this case, there will likely be delays before the money can be paid out to the heirs. This could affect their standard of living in the meantime.

The delays could be caused by the executor’s obligation to settle any debts in the estate, such as a bond.

If beneficiaries are named on a life policy, they will receive a payment as soon as the death claim is approved.

By naming specific beneficiaries, you ensure that the death benefit is paid directly to them, bypassing the estate and avoiding these potential issues.

Designating beneficiaries on your life insurance policy is a vital step in estate planning. It guarantees that your loved ones will receive the financial support you intend for them, without unnecessary delays or legal hurdles.

By taking the time to thoughtfully nominate and regularly update your beneficiaries, you provide clarity and peace of mind for yourself and your family.

For any questions or assistance regarding beneficiary nominations, please contact us at service@brightrock.co.za.