Will the proceeds of a life insurance policy be paid to me or to the estate of the deceased?

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A direct appointment will go directly to you and generally it’s better that way from a cost and efficiency standpoint.

By Rick Briers-Danks

May 25, 2021 00:13

If you are married out of the community and there is a life insurance policy of which I was the named beneficiary, will this be paid directly to me or should it go into the estate?


As the designated beneficiary of a life insurance policy, the funds will be paid directly to you and not to the estate. Once you provide a death certificate, complete an application form and provide your bank details, the funds should be disbursed.

In some cases, the life insurance company has additional requirements depending on whether the person died of natural causes or not. Other delays encountered relate to the provision of a copy of the identity document of the deceased or a copy of the identity document of the beneficiary.

It helps if you have all the required paperwork in place for a claim to be paid quickly.

If everything is in place, a claim can be paid in less than a week, but generally, in our experience, it takes three to four weeks to be processed and paid depending on the requirements of the life insurance company and the specific circumstances.

In our view, we would normally advise that it is preferable to have a direct appointment rather than naming the estate.

The time it takes to process and receive the funds is much faster as it goes directly to the recipient (paid into their bank account).

If the estate is named, it may take a few weeks just for the executor to be named in the master’s office and for an “overdue estate” bank account to be opened to receive the life cover proceeds.

It is also more cost effective to have a direct appointment as the executor does not have to deal with the claim and this is not part of the calculation of the executor’s compensation which can be up to 3.5% (plus the VAT) of the estate. .

It is important to note that it forms part of the calculation of inheritance tax, but if left to a spouse, it is exempt from inheritance tax; if it is part of a purchase and sale agreement, it is also excluded.

So, in summary, a direct appointment will go straight to you and generally it’s better that way from a cost and efficiency perspective.

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