Did you know that if your last will and testament says; 'Give everything to my wife', this will exclude any life insurance policies if she has not been named as the beneficiary, and your mother, for example, has. All payouts will be made to, and only to, the beneficiary you have named. In this regard, insurance policies are so powerful and iron-clad that what is stated within them will override your very own will.
For this reason, we need to decide wisely, and be sure to update any new information with your broker.
When your loved one passes away, the first thing that you should do, in terms of settling all the financial affairs, is find the will and testament of the deceased. This may indicate certain wishes to be fulfilled, or arrangements to be made, for the funeral and how they wish to be laid to rest.
The undertaker will usually arrange the death certificate, and if not, you can get a copy from Home Affairs. To claim for funeral cover, you will need this death certificate, a copy of your ID, a copy of the deceased's ID, and all policy details. To claim from life insurance, you will need all of the same, as well as your marriage certificate if you are the spouse, and a medical report in the case of death by natural causes.
If the death was unnatural, such as suicide or murder, you'll have to obtain the investigating officer's report, the postmortem report and sometimes even the inquest report.
The deceased's bank account will also be frozen, and in order to obtain a letter of authority to the bank, instructing them to close the account and pay out funds to the executor of the estate, you'll have to report the death to the Master of the High Court. You can do this via your local magistrates’ office at no cost.
When it comes to spending the money being paid out, it's important not to blow it all at once. This is a safety net, and not a gift. Instead, opt to reinvest, and grow the money in a unit trust fund. Or, if children are involved, it could be put to a good education, or education policy. This will ensure that the money can grow over time, and provide for your family for as long as possible.