Death-in-service - Separate group life assurance benefit

Is there a compulsory cover? 

In addition to your Member Individual Account that will be paid by the Retirement Fund, PetroSA operates a separate Group Life Assurance (GLA) Fund. 

You are required to be covered for a minimum death benefit of twice your annual pensionable salary under the GLA Fund. You will pay the premium required for this minimum benefit out of your after-tax income.  The current premium for this benefit is 0.78% of pensionable salary.

What is the voluntary cover I can choose from? 

You have the option under this arrangement to buy up to an additional 6 times annual pensionable salary death cover (making your total GLA cover 8 times your annual pensionable salary). The premium for this cover must also be paid out of after tax income.  The voluntary death cover you buy can only be in whole multiples of your annual pensionable salary (i.e. 1x, 2x, 3x etc.) 

What is the premium rate for the voluntary cover? 

The premium rate you pay for any voluntary additional death cover depends on your age according to the following table: 

Your age next Birthday Premium Rate (% of pensionable salary) for 1 * Salary extra cover.
35 and younger 0.20%
36 – 40  0.26%
41 – 45  0.30% 
46 – 50 0.40%
51 – 55 0.61%
56 – 60 0.85%
61 - 65 1.23%

For example this table reads that if you are currently aged 37, it will cost you 0.26% of your annual pensionable salary to secure additional voluntary death cover of 1 x annual pensionable salary. If you wish to increase your voluntary death cover to 5 times your annual pensionable salary, you would need to pay a contribution of 1.3% of annual pensionable salary (i.e. 0.26% x 5).

In the above example, your death cover from the separate GLA fund will be 7 times your annual pensionable salary and the premium you need to pay out of your after tax income is 2.08% of your pensionable salary (0.78% for your compulsory cover plus 1.3% for your voluntary cover). 

How much death cover do I require? 

As a general guideline, if you are married with dependents you require death cover equivalent to some 9 to 12 times your annual pensionable salary. Of course the actual cover you will require will depend on the ages of your dependents, your assets, the debt you have and the extent to which your dependents are able to generate their own income. 

In considering the level of your death cover you should take into account all your assets (including your Member Individual Account in the Retirement Fund), your debts, and any other insurance policies you have which provide death cover. 

PetroSA has developed an interactive death cover calculator that you can use to assist you in deciding on the level of death cover. 

Do the Retirement Fund trustees have discretion as to whom this benefit is payable on my death? 

As this benefit is provided by a separate Group Life Assurance arrangement, the Retirement Fund Trustees have no discretion as to whom this benefit is payable. (This is different from the death benefit of the Retirement Fund where the Trustees have do have such discretion.) 

It is, however, very important that you nominate the people who should receive the benefit in the event of your death. The reason is that the Group Life Assurance benefit must be paid to your nominated beneficiaries, as indicated on a form signed by yourself. In the absence of such a form, the benefit is paid to your estate. The Nomination forms are available from the Human Capital Department. 

How often can I elect to change my death cover? 

Subject to the maximum possible voluntary cover of 6 x annual pensionable salary, you can change your voluntary death cover on any of the following events: 

  • Reduce or increase your cover by any multiple of 1 x salary once a year at salary review time, provided that if your cover is increased you must submit satisfactory evidence of good health at your own expense;
  • Increase your cover by any multiple of 1 x salary if you get married, provided this is done within 3 months of the marriage; or
  • Increase your cover by 1 x salary on the birth of a child, provided this is done within three months of the birth.

It is your responsibility to contact the Human Capital department if you want to change your death cover on account of a change in dependency status over the year. 

If you wish to increase your voluntary death cover, you may be required to provide evidence of good health (see below). 

Do I need to provide evidence of good health? 

If your annual pensionable salary is less than R1 000 000 per annum you will not be required to provide evidence of good health for the compulsory and voluntary cover you have. This applies to most employees! 

If your annual pensionable salary exceeds R1 000 000 per annum, you will be required to provide evidence of health for any cover arising from your salary in excess of R1 000 000. 

For example, if your annual pensionable salary is R1 100 000 p.a. and you elect voluntary cover of 3 times your annual pensionable salary (making your total cover 5 times including the 2 times compulsory cover), you will have medical free cover of R5 million (i.e. R1 000 000 x 5 times cover) and need to provide evidence of health for cover of R500 000 (i.e. (R1 100 000 – R1 000 000) x 5 times cover). 

There are two important exceptions to the above, namely:

  • If you are 55 or older and wish to take voluntary cover, you will be required to provide evidence of good health for this voluntary cover; and 
  • If you elect a low level of voluntary cover initially and want to increase it at a future date, you will not be granted this additional cover unless you provide evidence that you are in good health. You thus need to be aware of the risk that you may not be able to increase in future if your health deteriorates in the intervening period. 

Do any restrictions apply to the policy? 

Yes, certain restrictions apply to this policy, namely:

  • If you have previously left employment as an ill-health retirement, then you may not be covered on death arising from the same condition unless you submit evidence of current good health.
  • Death as a result of war and/or nuclear, chemical and biological terrorism will not be covered. 

If you join PetroSA as a new employee you need to be actively at work on the first day of your appointment to qualify for this cover. If you are absent on the date on which your membership of the GLA Scheme starts, you will only be covered when you resume normal duties with PetroSA. 

What happens if I do not exercise a choice? 

If you do not exercise a choice you will only be covered for the core benefit (i.e. twice annual pensionable salary).