Your insurance is only as effective as the beneficiaries you nominate
13 Jul, 2022

Life is ever changing. We get married. We have children. We get divorced. We lose and gain loved ones. And all these life-changing moments impact the people who depend on us, and the people we depend on. How can we stay protected and ensure our lives are not significantly interrupted when the momentous or the unfortunate occurs?

According to Emda Fourie Head of Employee Benefits Consulting at Momentum Corporate Advice and Administration, when it comes to our insurance, this is dependent on keeping the information provided up to date. She illustrates this point by the tragic, but fictional story of Thandi, which represents a tale that is all too familiar to many South Africans and happens all too often in the insurance industry.

Years after losing her husband in a tragic car accident, Thandi’s life was rekindled when she met Thabo and again felt the healing power of love. A whirlwind romance soon led to marriage and the potential of a lifetime’s worth of happiness.

She added her new husband as a beneficiary to her retirement fund, splitting her death benefit three ways between him and her two children.

It wasn’t long before however, that Thandi found out Thabo has been cheating on her and only married her for her money. Without a second thought she divorced him but she forgot to remove him as a beneficiary from her retirement fund.

“Thandi tragically passed away six months later and without changing her nomination,” says Fourie. “Even though she’d wanted her benefits split evenly between just her two grieving children, Thabo was still listed as a beneficiary, and he received an allocation from her benefit.”

She says this all could have been avoided if Thandi updated her contact details for the fund which would have enabled the fund to provide her with regular benefit statements or reminders to update her beneficiaries.

The Pension Funds Act says that the trustees of a retirement fund must decide how the money will be paid out when you die, and who must receive it. Fourie says this why it is important to routinely keep your dependant and beneficiary details up to date on all your insurance policies.

According to, beneficiaries are the people you nominate to receive your death benefit after you’re gone.

However, Fourie notes that a dependant is any person who was legally or financially dependent on you at the time of your death. She says there are also future dependants, these are individuals who may have become your dependants if you had not died, such as an unborn child or elderly parent.

“Dependants get preference above beneficiaries, but you have to know that the trustees of a retirement fund will use your list of beneficiaries as an invaluable guide to determine both dependants and beneficiaries. This applies to your death benefit payable by your retirement fund, or approved benefits,” says Fourie.

According to, approved benefits are where the death benefit is provided through your retirement fund, and the trustees decide who it is paid to based on certain criteria. Unapproved benefits are provided through a policy in your employer’s name. These benefits must be paid in accordance with your beneficiary nomination form or if you don’t have one, into your deceased estate. The two types of benefits are also taxed differently.

It is thus even more important that you ensure that your dependants and nominees are updated for unapproved benefits, i.e. benefits offered via your employer of individual policies of insurance.

“Employers should encourage every employee for whom they offer death benefits to complete a beneficiary nomination form so that the benefit is paid in accordance with the employee’s wishes rather than being paid into the deceased’s estate,” says Fourie.

It is important that you keep tabs on your list of the beneficiaries for all your different policies, which should include the percentage allocated to each beneficiary. “Always make sure to contact the different financial institutions and update your beneficiaries because your circumstances will change, or could have changed already since you last completed your forms. Put it in the diary, make it an annual exercise so you will never leave a legacy that you didn’t intend. Let Thandi’s lesson serve as a reminder,” concludes Fourie.

For more information about beneficiaries and dependents, visit, a Momentum Corporate-led website that explains these benefits in a way that is easy for just about any employee to understand.



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