Independent financial services provider, Fedgroup, has seen an increase in the number of people taking the time to understand and update their policies and beneficiaries since the start of lockdown. But for those who haven’t done so yet, keeping your beneficiaries updated is one of the most important things you can do for your loved ones.
Walter van der Merwe, Chief Executive Officer of Fedgroup Life, tackles six key questions around updating your beneficiaries.
1. Question: What does it mean to ‘update your beneficiaries’ on your provident fund and insurance policies?
Answer: Updating your beneficiaries means that you update your provident fund or insurance provider about you and your family, and your intentions for your monies and policy benefits in the event of an unexpected death in your family. Should one of your dependants pass away, you’d likely be the recipient of benefits. In the event of your death, you may nominate your dependants and other beneficiaries to be considered as recipients for such benefits.
2. Q: Have you noticed any changes in people’s attitudes towards updating their policies during the COVID-19 lockdown?
A: Yes, definitely. As Fedgroup, we’ve noticed that during the lockdown period, people have made time to assess their insurance coverage and retirement savings. In so doing, many have also made the effort to better understand their benefits and what their policies entail. Many have been contacting their financial advisors to ensure they have sufficient insurance coverage in place and be sure that they can continue to afford the insurance policies that they have in place. This process has resulted in many people updating beneficiaries not only on their insurance policies, but also on their retirement savings plans and provident funds.
3. Q: Why is it important to keep your beneficiaries list up to date?
A: It’s important to ensure that your family and loved ones will be financially taken care of after your death. Maintaining an up-to-date beneficiary list is a big part of how you can do this.
4. Q: How often do you recommend people check/update their beneficiaries?
A: Everyone should update their beneficiaries at least annually. In addition, it’s critical that you update your beneficiaries immediately following any major life event, such as the birth of a child, marriage, divorce or if one of your designated beneficiaries passes away.
5. Q: How do you go about updating your beneficiaries?
A: You would need to contact your employer’s HR department and ask for the necessary form to complete to update your beneficiaries. If you’re already a member of a Fund, you’ll have the opportunity to update your beneficiaries when you receive your annual member benefit statement.
6. Q: What factors should you, as the policy/fund holder, consider when nominating beneficiaries? And what common mistakes should you avoid when naming beneficiaries?
A: Consider every family member who is financially dependent on you when you make your nominations, to ensure that they continue to be financially cared for after your death. Unfortunately, a common mistake is that we all think we’ll live forever and neglect this very simple exercise that will make a big difference to our loved ones in the event on our deaths.