Group Funeral Benefits
Sanlam Group Risk (SGR) is endorsing existing unapproved group life and funeral policies to remove employer, trustee, or committee discretion in the determination of beneficiaries for claim payments. This effectively means that death and funeral benefits will be paid to the member’s nominated beneficiary/ries or alternatively into the estate of the deceased member should the member have failed to nominate one or more persons to receive the benefit.
The payment of the funeral benefit into the member’s estate late is however especially problematic because, as indicated in the Insurance Act, the intention of funeral policies is to cover costs associated with a funeral or the rendering of a service on the happening of a death event. Payment into the estate late 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.
This also creates additional complexity if one considers that Rule 2A.8.1 of the Policyholder Protection Rules (PPRs) indicates that funeral claims must be paid within two business days after all required claim documents have been received by the insurer. In turn, Rule 2A.10.1 of the PPRs does allow the claimant to instruct the insurer to pay the funeral benefit directly to a service provider of the claimant’s choice, but the PPRs are not clear on how the insurer should apply the distinction between claimant and beneficiary, namely whether the claimant and the beneficiary are the same person in the context of a funeral policy.
Various pension/provident-related associations are currently engaging with the Financial Sector Conduct Authority on behalf of insurers regarding these challenges in the case of funeral policies. The Board of Trustees of the Building Industry Pension/ Provident Fund strongly believes that members must be actively encouraged to nominate beneficiaries as required in terms of legislation.
In those exceptional cases where beneficiaries have however not been nominated, SGR will apply the practice of paying the funeral benefit to the person responsible for the member’s funeral costs or directly to the relevant funeral service provider, if so, directed by the claimant. This however is only an interim measure that will be reassessed as and when feedback is received from the regulator.
With the above mentioned in mind, the Board of Trustees of the Building Industry Pension/Provident Fund (WP) is reaching out to all employers in the building Industry to ensure that their records regarding their employees’ nominated beneficiaries are up to date and easily available should a claim arise.
View the Funeral Beneficiary nomination form.