The Sanlam Umbrella Fund Insured Benefits Committee would like to highlight that the definition of “beneficiary” as contained in Schedule 2 of the Insurance Act 18 of 2017 (the Act) requires group policy benefits (e.g. unapproved benefits provided under a group insurance scheme) to be paid only to a “beneficiary”, as defined in the Act, thereby ensuring beneficiary outcomes are equitable. This means that the provision previously afforded to an employer to use its discretion in determining the beneficiaries to receive a payment for unapproved lump sum benefits is no longer allowed.
All existing unapproved group life and funeral insurance policies that allow for employer discretion are therefore impacted.
It is important to note that:
- The definition of “beneficiary” in accordance with the Act will be effective immediately for unapproved death benefits.
All our insurers (SGR, CAL, ABSA) must abide by strictly following the beneficiary nomination form, if fully completed. In the absence of a valid and completed nomination of beneficiary form, the proceeds from the unapproved death benefit will have to be paid into the deceased member’s estate.
- Because the funeral benefit is intended to cover the costs associated with a member’s funeral, Sanlam is consulting with the Prudential Authority on how to apply the provisions of the Act for this benefit as it would not be possible for the deceased’s family to utilise the benefit in time if it is paid to the deceased employee’s or member’s estate (in the absence of a nomination form).
Until further notice, our insurers will continue to pay the funeral benefit according to the current provisions in the applicable policy contract.