If married out of community and there is a life insurance policy where I was the nominated beneficiary, does that get paid out directly to me or should it go into the estate?
Rick Briers-Danks - Veritas Wealth
As the nominated beneficiary of a life insurance policy, the funds will get paid out to you directly and not get paid into the estate. Once you provide a death certificate, complete a claim form and supply your banking details the funds should get paid out.
In some instances, the life company has further requirements depending on whether the person died of natural causes or not. Other delays experienced relate to providing a copy of the ID of the deceased or a copy of the ID of the beneficiary.
It helps if you have all the required documentation in place for a claim to be paid out quickly.
If everything is in place a claim can be paid out in under a week but generally, in our experience, it takes three to four weeks to process and get paid out depending on the life company requirements and the specific circumstances.
In our view, we would normally advise that it is better to have a direct nomination as opposed to nominating the estate.
The time taken to process and receive the funds is far quicker as it goes directly to the beneficiary (paid into their bank account).
If the estate is nominated it may take a few weeks simply to get the executor appointed at the Master’s office and an ‘estate late’ bank account set up to receive the life cover proceeds.
It is also more cost-efficient to have a direct nomination as the executor does not have to deal with the claim and it does not form part of the calculation of executor remuneration which can be as much as 3.5% (plus Vat) of the estate.
Importantly it does form part of the estate duty calculation but if left to a spouse is estate duty-free; if part of a buy and sell agreement it is excluded too.
So, in summary, a direct nomination will go directly to you and generally it is best this way from a cost and efficiency point of view.