Some really good advice here from Personal Finance on beneficiaries of life assurance products.

This part in particular struck me:
The life insurers' life assurance claims departments regularly have to deal with desperate family members who cannot comprehend that they cannot access the proceeds of their breadwinner's life policy.

Gerhard Joubert, the chief executive of the Life Offices' Association, says this is because the policyholder failed to nominate a beneficiary or reinstate the original beneficiary after the policy had been ceded to cover a loan.

Joubert says you should check your beneficiary nominations at least once a year to make sure that they are still part of your overall estate plan.

Another problem area is the cession of policies to provide security for a loan. He says you should know what happens to your beneficiary nomination if you cede the policy as security, for example to a bank for a loan. You should name a beneficiary for any residue of the policy value after the bank has taken its slice and renominate a beneficiary once the loan has been paid.

You should always name a beneficiary to a life assurance policy, even if it is a trust or your estate.

This applies both to risk policies that pay out on your death and investment (endowment) policies.

The advantages of naming a beneficiary are:
  • The money will go directly to the right person or persons that you have nominated. The money is not tied up in the distribution of your estate, which can be subject to lengthy delays. Joubert says it can take six to 24 months to wind up an estate. If you nominate minor children, you may need to name a trust as a beneficiary.
  • No executor fees (normally about 3.5 percent plus VAT) will be deducted from the benefit if it is left to any party, including an individual and a trust, but not to your estate.


If you want the money to go to your estate to pay for an expense such as estate duty, then you should name your estate as the beneficiary. Executor fees will be payable.


An insolvent estate may not lay claim against life policy proceeds where there is a beneficiary. Where a policy falls into an insolvent estate, only R50 000 of the value of the policy is protected against creditors.

You should never:
  • Leave the beneficiary nomination line blank.
  • Allow a financial adviser to complete a proposal form for you.