The details in your beneficiary nomination form ensure that your loved ones (and other dependants) aren’t left in the lurch when you pass.
The strain of dealing with the loss of a loved one is hard enough, but too often, many families suffer financial burdens as well. Complete and up-to-date information in your beneficiary nomination smooths and quickens the process of pay-outs from any death benefits held with your employer’s fund.
If you belong to a fund that has death benefits and you die while in service of your employer, there is typically money that needs to be paid from that fund.
To pay out your death benefit, the insurance provider must ensure that all your dependents are fairly considered and protected. The insurers consider anyone whom you had a legal responsibility to support and those you supported financially or in kind.
Your insurance provider relies on the details included in your beneficiary nomination form to do so. They also source information from your employer, colleagues, family, and others that would have known you.
A complete and updated beneficiary nomination form makes this process easier. It helps ensure that the death claim can be settled smoothly and as quickly as possible. Without this form, the process may be delayed indefinitely, which may cause further financial and emotional strain on your loved ones.
It is more important than ever for members of any unapproved group life policy to complete a beneficiary nomination form.
How changes to the Insurance Act impacts your unapproved group life policy
The Insurance Act previously allowed the insurance provider to pay the death benefit from unapproved group life policies to the policyholder—this is usually the employer or any other legal entity defined in the policy. The payment clause in unapproved group life policies reflected this, giving the policyholder the discretion to identify and allocate the benefits to beneficiaries.
However, changes to the Insurance Act (Act 18 of 2017) now require that payment is made directly to beneficiaries, according to the deceased member’s beneficiary nomination form. Where the deceased member has not nominated a beneficiary or where the nomination is invalid, the insurance provider must pay the benefit to the deceased member’s estate.
Key takeout: Payments to the policyholder (usually the employer), who is not the end beneficiary, are no longer allowed by the Insurance Act.
It is more important than ever for members of any unapproved group life policy to complete a beneficiary nomination form.
Does this legal update affect my funeral benefits?
In a word, Yes.
Now, funeral benefits also need to be paid to the deceased member’s nominated beneficiary. If the member does not have a completed nomination form regarding their funeral benefits, it will be paid to the deceased member’s estate.
Paying the funeral benefit into the deceased member’s estate is especially problematic because families won’t receive the funds they need to cover funeral costs as intended.
Funeral policies exist to cover the costs associated with a funeral or the rendering of a service on the happening of a death event. Payment into the estate will result in the family’s immediate need to pay for the member’s funeral costs not being met due to considerable delays in settling the estate.
Key takeout: Complete or update your nomination form today!
There’s No Time to Waste
Give yourself the peace of mind that your dependants receive what they need. Please speak to one of our consultants to update your beneficiary nomination form today.
