2026 Money Insights | Why you need to think about your beneficiary
It’s important you nominate a beneficiary, as this tells your insurer or super fund who you want to receive your benefits in the event of your death.
Making sure your benefits go to the right person
A beneficiary is anyone who receives a payout from your Life Cover policy or superannuation when you die. When you nominate a beneficiary, this advised your insurer or super fund who you’d like to receive your benefits in the event of your death. So, it’s pretty important.
Nominating a beneficiaryalso makes it easier for your loved ones to access any payout they may be eligible for, which will help them remain financially protected during a difficult time.
Who can I choose to be a beneficiary?
The rules around who you can nominate as a beneficiary depend on whether your assets are held inside or outside of superannuation.
Outside super
You can choose anyone – family, friends, your estate, or even a trust.
Inside super
You’re limited to your spouse, children (of any age), financial dependants, someone you have an interdependency relationship with, or legal personal representative.
You can learn more in this article about choosing your beneficiaries and how to nominate them.
What happens without a valid nomination?
How your death benefit is treated if you don’t have a valid nomination also depends on whether your policy is held inside or outside of super.
Outside super
Your benefit goes to your estate and is distributed according to your will – or intestacy laws if you don’t have one.
Inside super
The trustee decides how to distribute your benefit, which may not align with your wishes. They may choose to pay it directly to your dependants, or your estate, in any proportion they see fit.
Trustees base their decision on a number of factors. These include the deceased member’s wishes (in the case of a non-binding nomination), the law, and the trust deed of the super fund. This process can be a lengthy one and won’t necessarily deliver the outcomes you would have wanted.
The importance of having a valid Will
A Will is a legal document that outlines how you want your assets distributed after your death. If you die without a Will, it’s called dying intestate. In that case, your assets will be distributed according to the intestacy laws of your state or territory, which might not reflect your wishes.
This poses some risks, including:
your assets not being distributed according to your wishes
your loved ones having to go through a lengthy and expensive legal process, and
the potential for arguments among your beneficiaries over their claim on your estate.
If you want to avoid these risks, you should consider making a Will. You can do this yourself or with the help of an estate-planning solicitor. It’s a good idea to regularly review your Will to make sure it remains up to date and reflects your wishes.
It’s also important to note that insurers and super fund trustees aren’t obliged to consider your Will when determining death benefit payments. They will consider a non-binding nomination but will follow the instructions of a valid binding nomination.
That’s why nominating a beneficiary is crucial to ensuring your loved ones are protected.
Ensure the right people get your insurance benefit
Life changes; marriage, divorce, children. Review your beneficiary regularly to make sure it is still valid and reflects your wishes.
IMPORTANT INFORMATION
RESEARCH INSIGHTS IS A PUBLICATION OF PERSONAL FINANCIAL SERVICES LIMITED ABN 26 098 725 145 (PFS). ANY ADVICE IN THIS ARTICLE IS GENERAL ADVICE ONLY AND DOES NOT TAKE INTO ACCOUNT THE OBJECTIVES, FINANCIAL SITUATION OR NEEDS OF ANY PARTICULAR PERSON. IT DOES NOT REPRESENT LEGAL, TAX OR PERSONAL ADVICE AND SHOULD NOT BE RELIED ON AS SUCH. YOU SHOULD OBTAIN FINANCIAL ADVICE RELEVANT TO YOUR CIRCUMSTANCES BEFORE MAKING PRODUCT DECISIONS. WHERE APPROPRIATE, SEEK PROFESSIONAL ADVICE FROM A FINANCIAL ADVISER. WHERE A PARTICULAR FINANCIAL PRODUCT IS MENTIONED, YOU SHOULD CONSIDER THE PRODUCT DISCLOSURE STATEMENT BEFORE MAKING ANY DECISIONS IN RELATION TO THE PRODUCT AND WE MAKE NO GUARANTEES REGARDING FUTURE PERFORMANCE OR IN RELATION TO ANY PARTICULAR OUTCOME. WHILST EVERY CARE HAS BEEN TAKEN IN THE PREPARATION OF THIS INFORMATION, IT MAY NOT REMAIN CURRENT AFTER THE DATE OF PUBLICATION AND PERSONAL FINANCIAL SERVICES LTD (PFS) AND ITS RELATED BODIES CORPORATE MAKE NO REPRESENTATION AS TO ITS ACCURACY OR COMPLETENESS.
