When someone in the family dies, bank accounts belonging to the deceased are frozen until the financial affairs of the estate are settled. For the family, this can be a difficult time, especially if the deceased is a breadwinner.
Although you may have life cover in place, this may not cover your family’s financial needs and the last thing you need is more stress. Most estates take some time to wind up (sometimes years), especially if there are complications, so you not only have to find money for funeral costs, you also have to take care of day-to-day expenses, bond payments, household bills and so on. Remember, too, that outstanding home loans and vehicle finance typically take priority over any pay-out to the family.
How, then, to guard against this? According to Chris de Klerk, a corporate actuary at PPS, you should consider an immediate needs benefit in your policy. This pays out up to R50 000 within two working days, on presentation of a death certificate, to beneficiaries when the policyholder passes away. The amount is then subtracted from the total amount of life cover eventually paid out.
Be aware, though, that some insurers will not pay out on a disability or life insurance claim if the policyholder was injured or killed taking part in extreme activities. Remember to read the terms and conditions that are set out in a policy and ask questions if you’re unsure. Be alert to possible exclusions — even travel to countries not covered by your insurance could jeopardise a pay-out.
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