Who is your life insurance beneficiary?
The entire purpose of a life insurance policy is to leave money to your family when you pass away.
The mechanism which enables you to do this is a 'beneficiary nomination', which is legislated under the Insurance Contracts Act 1984.
Nominating a beneficiary ensures your life insurance benefit is paid to the right person or persons.
Since many life insurance benefits are in the thousands, it pays to ensure you have a life insurance beneficiary to who you want all the money paid to.
Nominating a beneficiary
Most life insurance policies in Australia allow you to nominate a beneficiary, or beneficiaries. You can also allocate your proceeds to ensure each of your beneficiaries receives the correct amount of money.
Nominating a beneficiary is very important; it cannot be overturned by the insurer, and binds the company to pay your nominated beneficiaries.
Keeping your beneficiary nomination up to date
Over time, your circumstances may change as a result of separation, divorce, or loss of your spouse or partner. Any of these changes may prompt a need to update your beneficiary nomination.
To change your life insurance beneficiary nomination you can speak to your insurer or complete an updated 'Beneficiary Amendment' form to update your nominated beneficiaries..
What happens if I don't nominate a beneficiary?
You cannot assume that your life insurance benefit will end up in the right hands.
If you don't nominate a beneficiary your life insurance proceeds will be paid to your estate, and will be distributed according to your Will, if you have one in place. If you do not have a Will, your estate will be subject to state intestacy laws. This can leave significant financial implications for your family and friends.
Nominating a beneficiary can ensure you are getting the certainty you require as to who will receive your life insurance benefits.
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