Life insurance and its consequent death benefits are designed to reassure that the beneficiaries will be taken care of even after the principal has passed away. Think of it as a thoughtful and practical legacy that the principal will want to leave for his family. This is in so many ways an investment in the good future of future generations.
For the Benefit of the Living
In South Africa, the death benefit represents the amount of money paid out to the stated beneficiaries of a valid life insurance contract upon the death of the insured person. Keep in mind that the death benefit has a noble purpose where the insured person is concerned: to provide continued monetary support (i.e., income) for the beneficiaries. This is of critical importance for the beneficiaries who rely on the insured person as their main provider.
Many death benefits have no stated beneficiaries in the contract. In this case, the full value of the insurance will go to the insured person’s estate.
For the Face Amount Stated on the Contract
In most cases, the amount of death benefits paid to the beneficiaries is the face amount stated on the contract. The face amount refers to the initial amount of money disbursed to the beneficiary but it can change for any number of reasons. These include the additional paid-up insurance caused by the dividends and increase in cash value.
It must be emphasized, nonetheless, that the death benefits will likely stay as is, even decrease, than increase in a substantial manner. Ask your insurance provider about it so that you can be enlightened about the reasons.
For the Death of the Insured Person
The death benefits will only be paid upon the receipt, review and approval of a valid death claim filed by the stated beneficiaries on the life insurance contract. The claim will only qualify when the reason for death was not precluded by the contract. The insurance company is under the obligation of making timely pay out of the agreed amounts to the beneficiaries, or else face the legal consequences.
Indeed, death benefits should be thoroughly discussed by the insured person, the beneficiaries, and the insurance agent so as to cover all the bases. Death is inevitable but providing for your family even in death is possible, thanks to death benefits