Nominating beneficiaries for your life insurance policy is a crucial step in ensuring that your loved ones are financially protected if you pass away. By making a nomination, you designate individuals who will receive the proceeds of your life cover. These individuals are known as your beneficiaries. You can specify what proportion of the benefit each beneficiary will receive, and you can update your nominations at any time to reflect changes in your circumstances.

Who Can Be Nominated for Your Life Insurance?

The rules for nominating beneficiaries depend on whether your life insurance policy is held inside or outside of superannuation. Policies held within a superannuation structure have stricter rules, and nominations must comply with superannuation laws.

For policies inside superannuation, you can nominate:

Dependents:

This includes your spouse, de facto spouse, legally married spouse, same-sex partner, and children (including adopted children) as defined under the Family Law Act 1975. It also includes any person who is financially dependent on you or someone with whom you have an interdependency relationship.

Interdependency Relationship:

This refers to individuals with whom you share a close personal relationship, live together, and provide mutual domestic, financial, and personal support.

Legal Personal Representative (Your Estate):

This is the executor of your estate, who will distribute your life insurance benefits according to your will or state-based intestacy laws if no valid will exists.

Making a Valid Nomination for Your Life Insurance

To ensure your loved ones can access your life insurance benefits quickly and with peace of mind, it is essential to make a valid nomination. This typically involves having two witnesses sign your nomination form. The nomination must be completed in writing, either as part of the initial insurance application or by submitting a separate nomination form to your insurer at a later date.

If no valid nomination is in place, the proceeds of your life insurance policy may be paid to your estate (if the policy is held outside of superannuation) or to the trustee of the policy (if held within superannuation). The trustee will then decide how to distribute the proceeds, which can be a lengthy process and may cause stress for potential beneficiaries if disputes arise.

Considerations for Tax Consequences

It’s important to be aware that there may be tax implications depending on who you nominate as your beneficiary. These tax consequences should be considered carefully before making your nomination.

 

To ensure your nominations are valid and up-to-date, consider consulting with Morgans Insurance Advisors as your preferred life insurance broker. We can help you navigate the complexities of life insurance nominations and ensure your loved ones are protected.