The term superannuation refers to retirement benefits and group life assurances. We now discuss each in turn.
Retirement Benefit Schemes
The aim of the retirement benefits scheme is to ensure that some form of pension is available on retirement. Life assurance companies perform a vital role in running pension schemes by:
- organizing a whole scheme, receiving premium contributions, investing funds and administering the pension;
- managing funds of a pension scheme;
- Providing life assurance benefits for widows and widowers of scheme members who die before retirement. Benefits for those eligible for the scheme relate to service and salary.
Policies are usually issued insuring death in service benefits for employees who do not reach retirement age.
Group Life Assurance
These are collective life policies usually taken by employers to provide a benefit to the dependents of the employees who die in service. Lives assured are covered for as long as they remain part of the group and ceases once they leave employment.
One policy document is issued in the name of the employer but employers may receive a certificate of membership to the scheme.
The underwriting for these policies is much simpler than that for the individual policies because of the favorable lives assured under the policy compensate for the unfavorable ones in the group.