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n Tydskrif vir die Suid-Afrikaanse Reg - Nomination of a beneficiary in a life policy and the effect of the prior death of the beneficiary
PPS Insurance Company Ltd v Mkhabela 2011 JOL 28083 (SCA) : regspraak
The legal construction and consequences of a contract in favour of a third party remain an enigmatic matter, especially in the insurance context. Opinions diverge (see Reinecke and Nienaber "A suggested template for beneficiary nominations" 2009 SA Merc LJ 1 and Nienaber and Reinecke Life Insurance in South Africa A Compendium A Perspective from the office of the Ombudsman for Long-term Insurance (2009) ch 18). The Mkhabela case is a further chapter in the development of this legal phenomenon.
The policyholder (Miss Sebata) took out a life policy on her own life and nominated her mother (Ms Mkhabela) as beneficiary for the death proceeds. The policy provided that the nomination was revocable at the instance of the policyholder. The beneficiary accepted the nomination during her lifetime and the insurer recorded her acceptance. The beneficiary died and about two months thereafter the policyholder also died. The policyholder at no stage revoked the beneficiary nomination. The executor of the beneficiary claimed the proceeds of the policy from the insurer, but the court of first instance rejected the claim. On appeal to the full court the claim was upheld. The insurer appealed against the decision of the full court and succeeded.
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