The importance of an up to date beneficiary nomination form for your retirement fund and death benefits
The main reason most people take out death benefits is to ensure that their loved ones will be taken care of in the event of their untimely death. To make sure that your death benefits do exactly that, you must nominate one or more beneficiaries to receive your death benefits. However, the sad reality is that many people neglect to do so.
Failing to identify a beneficiary and completing a beneficiary nomination form can make the claims process very tedious, lengthy and difficult. This will place even more pressure and stress on your loved ones who may already be dealing with the trauma of losing you. That is why Cornerstone Employee Benefits is dedicated to ensuring that all our clients have completed beneficiary nomination forms in place. This form is either kept by the employer, updated on the policy or the insurer’s online portal.
To empower you, our reader, we have put together some commonly asked questions about beneficiary nomination forms and answered each of them. So, if you’ve ever had a question about beneficiaries or beneficiary nomination forms and how they work, this article is for you.
What is a beneficiary nomination form?
A beneficiary nomination form is a document that identifies people you chose to receive your death benefits in the event of a claim. It does not replace a will but is still very important to ensure that the trustees of the fund or service provider know who to pay the death benefits to.
Where do I get one?
You can get a beneficiary nomination form by requesting it from your human resources department, your employee benefits broker or, in many cases, you can download it directly from the insurer’s websites. Once you have identified a beneficiary and provided all the necessary information on the form, be sure to return it to your HR department or send it to your employee benefits broker to place it on file.
Who do I put on as beneficiary?
You are allowed to nominate any living and natural person as a beneficiary, including children, friends, family members, spouses and partners. However, it’s vital that you trust the person you choose implicitly as the benefits that are paid out will become their property. You may also nominate a legal entity if you wish e.g the SPCA or The Nelson Mandela Trust.
Can I update or change my beneficiary?
Yes, you can. There is no limit to how many times you can change your nominated beneficiary or beneficiaries. Life is unpredictable and if your personal circumstances change, it is vital to update your beneficiary nomination form. To update or change your nominated beneficiary, merely inform your HR department or your employee benefits broker and they will guide you through the process, which is entirely confidential, and your changes and updates will not be shared with anyone.
A useful tip: adding additional information about your nominated beneficiary can be very helpful. If possible, submit the following extra information with your beneficiary nomination form as it can make the process of distributing death benefits much smoother and faster:
- Phone numbers
- Copy of their ID and birth certificate
Different ways death benefits are paid out
Yes, approved and unapproved death benefits have slightly different ways of using nomination forms, however they remain equally important.
With approved risk benefits there will be a board of trustees that will facilitate all death claims and distribution of death benefits. You will still be required to complete a nomination form when joining the Fund, or as and when your beneficiary details change; however, the trustees will ultimately decide on the distribution of your death benefits, by exercising their fiduciary duties under Section 37C of the Pension Funds Act, and after investigating your personal circumstances at death. In this case, a beneficiary nomination form worls as a guide and as a wish list from the deceased individual.
With unapproved death benefits, your beneficiary nomination form is seen as your last and final wishes. Here, there are no trustees and the full death benefit will be paid out as instructed on the nomination form. Therefore, it is imperative that your nomination of beneficiary form is always kept up to date and is submitted to your HR officer to ensure safe keeping in your personnel file.
If you are still riddled with questions, we will be more than delighted to help you. The best way to ensure that you have all the proper documentation in place, is to appoint a qualified employee benefits specialist to assist you. Click here to contact Cornerstone Employee Benefits and see how we can assist. For more interesting and useful content, follow us on Facebook and LinkedIn and remember to subscribe to our monthly newsletter.