S.D. Codified Laws § 58-33-23
All life insurance benefits shall be paid in cash to the beneficiary. No insurer engaged in the business of life insurance shall contract to pay or pay such insurance benefits to any funeral director, undertaker, or undertaking business. Violation of this section is a Class 2 misdemeanor. This section does not prohibit an insurer from paying life insurance benefits to a funeral director, undertaker, or undertaking business, whether or not an assignment of the policy has been made pursuant to § 58-11-36, if the insurer makes the payment pursuant to an assignment made by the beneficiary of the insurance benefits to a person or entity which performed burial or funeral services for the insured or contracted after the death of the insured to perform burial or funeral services for the insured. If the cost of the burial or funeral services performed is less than the benefit amount to be paid under the life insurance policy, the insurer shall pay the excess to the named beneficiary in accordance with the terms of the contract.
This section does not prohibit a fraternal benefit society from paying the proceeds of a life insurance policy in accordance with the provisions of § 58-37A-17. An insurer that is not a fraternal benefit society may pay the proceeds of a life insurance policy in the same manner and subject to the same restrictions as provided for by § 58-37A-17.
SDCL 58-33-23