Choosing a life insurance beneficiary

People take out life insurance to protect the people closest to them. If you are diagnosed with a terminal illness or unexpectedly pass away, life insurance can provide a lump sum to your loved ones to help them cover outstanding debts and everyday expenses. That’s why choosing who gets your life insurance payout is an important decision.

What is a ‘beneficiary’?

In the context of life insurance, a beneficiary is the person or entity that benefits from your insurance policy by receiving your payout.

Who can I nominate?

A life insurance beneficiary could be a person, trust, charity or even estate. You can have more than one beneficiary on your policy — for example, you might have a few people nominated, or some people and a charity. If you nominate more than one beneficiary, you’ll also need to let the insurer know the portion you’d like each to receive. Any person you nominate generally needs to be at least 18 years old to receive the benefit. You can still nominate someone younger, but any payout would be held in a trust until they turn 18. This is important to keep in mind if you’re getting life insurance to protect your children. When you’re choosing your beneficiaries, you should consider who depends on you financially, and who would be affected by any outstanding debt you have.

When do I nominate a beneficiary?

You’ll usually need to nominate a beneficiary when you apply for your life insurance, but that doesn’t mean it’s something you should set and forget about. You can change your nomination at any time — for example, you might be single now but married with a spouse and children down the track (in this case, you’d likely need to review the amount you’re insured for too). Or perhaps someone ends up needing more support than your original beneficiary. This is why it’s important to review your insurance regularly — you may need to update your beneficiary nominations.

Let people know

It’s important to talk your decision through with the people you’re closest to — clear communication can save family members from confusion and misunderstandings later on.

It’s a big decision — reach out to our team for help by contacting us here.

Any advice is general in nature only and has been prepared without considering your needs, objectives or financial situation. Before acting on it you should consider its appropriateness for you, having regard to those factors. Before making any decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement.