What happens to my payout if I have debt?
A lot of people think that debt disappears when you die. It doesn’t. But we don’t always pay the bank first.
Exactly who gets stuck with the bill can get pretty complicated, depending on how much debt you’re in, whether you have a will, what insurance you have, whether you’re married or just living together, whether you’re married in community of property or not, and if you have kids.
From our side, it works like this:
If you haven’t specified a beneficiary, we’ll pay out to your estate. Your estate is everything you own when you die, including cash in the bank or assets (like your house, car or designer sunnies 🕶). The executor of your estate might sell your stuff to pay off any debts that you owe (like your bond). Then they’ll pay out whatever’s left to the heirs you’ve named in your will, or if there’s no will, to your legal next of kin.
If you’ve specified a beneficiary, we’ll pay directly to them without telling your creditors 🤫. But after your beneficiary gets the cash, we can’t promise that the bank won’t come a-knockin’. For example, if you’re married in community of property (which you are by default, unless you paid a lawyer to get an antenuptial contract before you got married), then your spouse will inherit any debts you left behind and they might need to use the payout to settle your debts anyway.
If you’ve ceded your policy, then we’ll pay out to the cessionary (usually, your bank).
If you’re worried about how your family will manage after you’re gone, it might be a good idea to chat to a financial advisor about how much insurance to buy for your specific situation. You can contact us and we’ll put you in touch with one.
What happens if I don’t have a will?
Wills are usually a really, really good idea. If your needs are straightforward, our parent company, Sanlam, has a nifty tool to create a basic will online.