Life insurance is an important part of legacy planning, particularly for your family. It’s useful in ensuring that your beneficiaries are taken care of in the event of your death. However, there are a number of things your beneficiaries will need to know about claiming the death benefit on your life insurance policy, particularly where they live abroad. This is important because life insurance providers find it challenging to finalise death benefit claim payments where beneficiaries live outside of South Africa, which can result in death benefit funds being transferred to an unclaimed account if not successfully paid out.

To avoid this happening, let’s take a look at the death claim process, and see what supporting documentation is required and how to streamline the claims process.

What is a death benefit?

A death benefit is the money that is payable to the beneficiary of a life insurance policy, annuity, or pension upon the death of the insured person or the annuitant. In the case of life insurance policies, death benefit claims are not subject to income tax, and the named beneficiaries generally receive the death benefit as a lump sum payment.

When the insured/annuitant dies, the beneficiaries become entitled to claim the death benefit. In order to get paid out from a death benefit claim, the legally-entitled beneficiary is required to approach the claims department of the insurance provider and supply proof of death of the insured/annuitant, and put in a request to receive payment based on the terms of the life insurance plan.

What do you need to make a death benefit claim?

The following documents are required from a beneficiary to process a death benefit claim:

1. Death certificate of the deceased
2. Copy of ID of the deceased
3. Deceased tax number (if a retirement annuity)
4. Copy of ID of the claimant
5. Copy of ID of the beneficiary(ies)
6. Proof of bank account to which funds need to be paid

Depending on the insurer, it might be necessary to provide a certified copy of the official death certificate. Additional documents required will depend on the relevant insurance provider.

• Here’s how to submit a death claim to Momentum
• Here’s what you need to know about the Sanlam death claim process
• Here’s how to make a death claim from an Old Mutual Retirement Annuity

What you need to know when you are claiming death benefits from policies other than retirement annuities:

• Funds will be paid directly to the appointed beneficiary. If there is no named beneficiary, the funds will be paid into the deceased’s estate.
• If a policy has been handed over (ceded) to an individual or institution as collateral or security, the insurer is obliged to settle the outstanding debt, after which the cessionary will pay any remaining balance to the beneficiary or estate.
• If the policy is ceded by way of an outright cession, ownership of the policy passes to the individual or institution to which it was ceded. Here, the life insured is not permitted to appoint a beneficiary and only the cessionary can deal with the policy further.

What you need to know about making a death benefits claim from retirement annuities and other retirement fund benefits:

• The Board of Trustees is responsible for deciding who should receive the money.
• In making their decision they will take into consideration all dependents. Although the deceased may have appointed a nominee, it is ultimately at the discretion of the Board to decide how the money is paid out.
• The Board of Trustees will take such nominees (if any) into consideration when identifying deceased’s dependents.

Supporting documents required for making a death benefit claim from a retirement annuity:

• Last Will and Testament. If the deceased died intestate (without a Will) it might be necessary to provide an affidavit stating as such.
• The deceased’s personal income tax number.
• If the deceased did not have any dependents or did not appoint any nominees at the time of death, the proceeds will be paid to the estate 12 months after the date of death in terms of the Pension Fund Act.
• Depending on the deceased’s personal circumstances, additional documentation might be requested by the Fund.

What to do to make a death benefit claim when the deceased did not have a last Will and Testament?

• The next of kin must obtain the Next of Kin Affidavit (form number J192) at the Magistrate or Master of the High Court.
• The form must be completed by the person charged with administering the deceased’s estate.
• This completed form must be handed to the Master of the High Court.

Is the death benefit claim money payable to the estate?

The Master of the High Court will issue a letter of Executorship/Authorisation letter that serves to appoint a person (such as the next of kin, attorney, or estate administrator) to act on behalf of the estate. The Insurer must be provided with the letter of Executorship/Authorisation letter and the bank details of the estate in order to carry out the payment.

FinGlobal: cross-border financial service specialists

If you’re the beneficiary of a life insurance policy or a South African inheritance, we can handle your death benefit claim for you no matter where you live outside of South Africa. We’ll handle all the paperwork for you, deal with the insurance providers on your behalf, while you track our progress online. We can even open a non-resident bank account in South Africa for you, to facilitate the transfer of your funds abroad.  To get started, leave your contact details in the form below and we’ll be in touch!