South Africa: What’s Yours is Mine and What’s Mine is Mine

In Naidoo v Discovery Life Limited & others the Supreme Court of Appeal was faced with the main task of determining whether a risk-only policy with a beneficiary clause constitutes an asset in the joint-estate. This case deals with two areas of law, insurance and matrimonial law, and illustrates the interplay between the two.

The concept of marriage in community of property is that spouses are in a "universal economic" partnership and all their assets and liabilities are combined in a joint estate in which they hold equal shares, no matter their financial contributions to the joint estate.

The appellant in the case had been married to the deceased, who had purchased a joint life assurance policy by the first respondent. The material terms of the policy included: the deceased was the owner of the policy, that he was also the principal life insured, he could at any time direct Discovery in writing to change the nominated beneficiary and that he could also, at any time, revoke the appointment of a beneficiary. Originally the appellant had been named as beneficiary, but later changed it to that of his parents, brother and sister as the new beneficiaries.

The appellant's contention was that the rights and obligations under the policy vested in the joint estate, including the right to designate beneficiaries of the policy. Thus, the deceased should not have been able to alter the beneficiaries without her written approval. The court found that a risk-only life insurance policy taken out on the life of the policyholder is not an asset and is thus not an asset in the joint estate and the right to nominate a beneficiary or to change a nominated beneficiary does not amount to an alienation of a right to the asset in the joint estate.

See Hogan Levell, South Africa: What’s Yours is Mine and What’s Mine is Mine, Lexology, September 20, 2018.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.