HAVING a basic life insurance policy is not always enough to ensure your loved ones are able to manage financially if you pass away.

This is especially if your cover doesn’t help them deal with the financial challenges they will face at various times after your death.

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According to head of growth at FNB Fiduciary Johan Strydom, there are three distinct phases of financial needs that family members face after a loved one dies.

It is vital that your life insurance is structured in such a way that it provides the financial support your loved ones need through each of these phases.

‘Families are faced with the reality of managing finances of deceased family members,’ Strydom says, ‘and these aren’t just long-term money security concerns, but also day-to-day financial issues, some of which occur the day after the person passes away.

‘Most people don’t realise that very soon after a person dies, their bank is required to freeze their accounts so the process of finalising their estate can begin,’ Strydom explains.

‘And at that point it is impossible for family members to access those bank accounts or withdraw money from them.’

He points out that this can pose significant problems for the family members if they don’t have other sources of money to pay for a funeral or memorial service.

‘Unfortunately, banks have no legal mandate to pay out money to loved ones after an account holder has passed away,’ he explains.

‘They are only permitted to transfer the money in that account to the appointed executor, who then includes it in the often lengthy process of finalising the estate.’

The second significant challenge that many surviving families face is the need to access money to pay for their day-to-day living expenses.

‘These expenses don’t stop because a loved one has died,’ Strydom emphasises.

‘Unless there is money readily available to the family members who are left behind, they will struggle to pay the normal regular bills that will continue to arrive.

‘And that’s not to mention essential costs like food and clothing.’

He explains that without the money to cover these living costs for a few months, the family could very quickly find themselves in severe financial difficulty, and potentially end up facing late payment penalties, bad credit records, or possibly even eviction.