Things To Consider When Choosing A Life Insurance Beneficiary
When taking out a life insurance policy, it’s important to consider who should be your life insurance beneficiary and the role they play.
What is a life insurance beneficiary?
A life insurance beneficiary is the person who will receive your life insurance payment should you pass away. When choosing yours, it’s important to think about who you would want to financially take care of should something happen to you.
What happens if you don’t have a beneficiary?
If you hold the policy in your name, your benefit will go to your estate and be managed as part of your will. If you have outstanding debts when you pass away, your benefit may be used to pay them before it is distributed to the people named in your will — this means your loved ones could miss out on the payment.
Who can be a beneficiary?
Naming a beneficiary ensures your benefit is not paid to your estate and goes directly to the person you nominate. It’s important to consider that if your beneficiary has any debts the proceeds might be used to pay them off. As well as this, keep in mind that if you nominate a minor such as your children, they will only receive the full amount once they turn 18.
A binding nomination is a legally binding statement which your insurer will use to know who your money should go to if you pass away.
A non-binding nomination is not legally binding. Your insurer will take your non-binding into consideration when making the life insurance payment on your behalf, in addition to other aspects of the law.
To ensure your family is looked after when you’re not around, it’s important to keep your beneficiary details up to date within your super account.
How to keep your beneficiary up to date
You should evaluate your beneficiary and policy at any major life event — for example, purchasing a home, having children, getting married, getting divorced or the death of a loved one. Having life insurance beneficiaries up to date ensures your loved ones are taken care of financially if something were to happen to you.
If you have any questions concerning beneficiaries, please reach out and we can assist you. Don’t hesitate to get in touch if you’d like to chat more - contact us via info@ultimumfinancial.com
GENERAL ADVICE WARNING
The advice contained within this document does not consider any person’s particular objectives, needs or financial situation. Before making a decision regarding the acquisition or disposal of a Financial Product, persons should assess whether the advice is appropriate to their objectives, needs or financial situation. Persons may wish to make their assessment themselves or seek the help of an adviser. No responsibility is taken for persons acting on the information within this document. Persons doing so, do so at their own risk. Before acquiring a financial product, a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.