The Sanlam Umbrella Fund Insured Benefits Committee communicated changes to the definition of “beneficiary” as contained in Schedule 2 of the Insurance Act 18 of 2017 in the June 2021 Toolkit. Click here to view this communication.
At the time, the impact of the change was taken up with the Prudential Authority. The Authority provided further clarification regarding the application of employer, committee or trustee discretion in the determination of beneficiaries under group life insurance policies, indicating that the omission of such discretion from the definition of “beneficiary” was deliberate in its statutory construct.
As a result, existing policy contracts incorporating such forms of discretion are no longer permitted. Our insurers therefore have updated the group insurance policies with the following changes with effect from 1 December 2021:
- Compliance with the definition of “beneficiary” in the Insurance Act
- Payment of benefits will only be paid into a bank account held in the Republic of South Africa in the name of the Beneficiary.
As a result of the policy update, members are required to nominate beneficiaries who will receive the funeral benefit when a member passes away. The employer is required to keep regularly updated Beneficiary Nomination Forms for all employees’ unapproved group insurance benefits on record. This will ensure that the insurer pays their unapproved death and funeral benefits according to their final wishes, and that the payment is not made to the deceased member’s estate.
For more information on beneficiary nominations and the processes that apply, click here.