Here’s an excellent life insurance (and financial planning) question we received yesterday via the blog…
Question: beneficiary of life policy is different to beneficiary on will. Life policy beneficiary is wife, will states beneficiary to be adopted daughter. Who gets the proceeds? Where is this in legislation or court rulings?
Here’s our response:
The proceeds of your life insurance policy does not fall under the ambit of your will unless no beneficiary is nominated.
If no beneficiary is nominated then the proceeds are paid to your estate where it is handled in line with the Wills Act (or the Intestate Succession Act if you don’t have a will!). The proceeds are used as follows:
- Firstly, to settle any debts, and
- Secondly, as an inheritance.
If your wish is for your adopted daughter to receive the life insurance benefits then you would need to nominate her as the beneficiary for proceeds on your life insurance policy.
An easier way to think of this is by looking at it as you would look at a cession.
If your daughter is the heir in terms of your will, BUT, you cede your life insurance policy to the bank for a loan, then the bank has first claim to the proceeds of your life insurance regardless of who is beneficiary in terms of your will (or whoever is nominated beneficiary of your life insurance for that matter).
Your will is a document which speaks for you when you no longer can.
It simply states:
- What your last wishes are,
- Which assets must be disposed of, and
- Who gets to inherit what.
Remember that all creditor claims will need to be settled by your estate before any heir can inherit in terms of your will which is all the more reason for having sufficient life insurance in place.
Till later
Lawrence
Related posts:
- Life Insurance | Can You Purchase Insurance On Someone Else’s Life?
- Life Insurance Companies Do Pay Out!
- Life Insurance | The Obvious Reason Why You Need Life Insurance
- Hands Up Those Of You Without A Will!
- Discovery Life Insurance | It’s A Life Plan, Not Life Insurance!
Article by Lawrence
Someone, who as he gets older, finds he has more questions than answers
Lawrence has written 150 awesome articles for us at Insurance Fundi
