Death benefit coverage: a non-standard option

In addition to a monthly paycheck, many employers also provide their staff with a package of fringe benefits. Group insurance is one of the best known and most commonly offered fringe benefits. It provides the opportunity to top up your state pension with a supplementary pension, available through your employer. If you have a group insurance plan, it may also come with supplementary death benefit coverage. This means that your beneficiaries will be entitled to collect a certain sum if you pass away before you reach retirement age.

Not that this is a subject that keeps you up at night, but you might want to know exactly what’s included, for future reference.
What is death benefit coverage?
Death benefit coverage
Death benefit coverage will provide your beneficiaries with a financial windfall if you should pass away before you retire.

The death of a loved one is a particularly painful experience. And if the emotional distress wasn't hard enough, there may be financial strain as well. The surviving spouse/partner is suddenly single, alone and grieving, and may still have dependent children at home to support. In these kinds of situations, a financial windfall can be a real blessing. And this is precisely what a group insurance plan with death benefit coverage can do for you.

Death benefit coverage is a form of life insurance that your employer can add to your group insurance plan. In your pension plan regulations, your employer will specify the pre-set amount that will be paid out to your beneficiaries if you should pass away before you retire.

To fund this death benefit coverage, employer contributions will be made towards your death benefit proceeds (in the form of a "Death Benefit premium") on top of the usual group insurance contributions ("Retirement premium"). In some cases, your employer will allow you to set your death benefit coverage level yourself. If so, you can choose between building a bigger nest egg for yourself (Retirement benefit) or providing your beneficiaries with a bigger windfall in the event of your death (Death benefit).

Although it's increasingly common, not all group insurance plans come with death benefit coverage. Not sure whether your group insurance plan includes death benefit coverage or not? To find out, log in to My Global Benefits, or check with your HR department.

Who will be entitled to collect my death benefit proceeds?

Your pension plan regulations will specify the beneficiaries of your pre-set death benefit proceeds in the event of your death.  

The pension plan regulations apply a standard sequence of beneficiaries. If permitted in the regulations, you may deviate from the standard order of precedence.

For more information about the proceeds payable to your beneficiaries, see our detailed information page, or download our explanatory note.

Death benefit coverage
Your pension plan regulations will specify the beneficiaries of your group insurance death benefit proceeds in the event of your death.
Does my death benefit coverage serve any purpose while I’m alive?
Death benefit coverage
You can use your death benefit coverage while you’re still alive as an alternative to outstanding balance insurance

Yes, it does. You can use it as an alternative to outstanding balance insurance on a mortgage loan. 

If your group insurance plan includes death benefit coverage, you may be able to use it as an alternative to outstanding balance insurance. If you should pass away before your mortgage maturity date, your group insurance death benefit proceeds will not be paid to your beneficiaries but to your mortgage lender instead, to settle your outstanding home loan. Any remaining balance will then go to your beneficiaries. This means that you do not need to take out outstanding balance insurance for the share of your mortgage loan that is covered by your death benefit coverage. 

Did you know that you can also apply (part of) your group insurance plan towards purchasing, building or renovating your own home? Click here to find out more.