LIFE AFTER DEATH
There is life after death, at least for those left behind. Why not make the transition, of your loved ones, through their grief as easy as possible by being prepared for when you are no longer around. Oakleigh are running a series of tips to assist people avoid the common pitfalls encountered by grieving families.
We recently had a client who decided against taking out a funeral policy, because she felt her investments would take care of any funeral expenses. This is a strategy we encounter often, and it isn’t always a bad idea, but you do need to do a bit of homework to make sure it will actually work. We spoke to Michael Cason, from Liberty Life, to shed more light on this topic:
“When someone passes away, what should happen is that all their assets – including investments and bank accounts – become immediately frozen. To ensure no unauthorised transactions take place, this is audited by the master of the court in the course of processing the estate. Those assets only become available again once the estate is wound up, which can take months or, as is too often the case, years.
This can leave surviving family stranded with no funds for funeral expenses or more urgently – general living costs like rent and groceries.
Some types of investments (such as Retirement Annuities, or “Endowment” policies) can be immune to the above, depending on how they have been set up. But your run-of-the-mill unit trust investments, stock portfolios and money market accounts will all be inaccessible until the estate is wound up.
The gold standard for life planning is to sit with a Financial Advisor who will do all the necessary homework to make sure your investments, insurances, work benefits and other assets are working together in the most efficient manner. But if for whatever reason you can’t do that, then a funeral policy is an inexpensive, uncomplicated way to quickly make sure at least your funeral costs will be covered.
This is not to imply that Funeral policies are just a stop-gap. Funeral policies can do a number of unique things which give them a place in almost every “complete” financial plan. For example, they permit multiple people to be covered on a single policy for relatively small amounts, instead of the minimum R 100 000.00 that most Life Insurance policies will insist upon. Most usefully, they might be able to cover people who are too old, too young, or too unhealthy to qualify for other types of cover.”
The take away from all of this should be that planning is important – and that a plan is only as good as the work that has gone into checking it. Whether your planning makes use of funeral policies, life insurance or accessible assets, making sure it will be able to do what it is supposed to once you have passed on will be a huge gift of love to those you leave behind.