Ensuring death benefits are paid to the intended recipient is crucial when structuring your life insurance policy. With modern day family structures, it is increasingly likely there may be multiple people who could potentially claim to the life insurance benefit should a claim arise.
A binding death beneficiary nomination plays an important role when life insurance cover is held inside superannuation, as it enables the insured person to direct their death benefit to their preferred dependent rather than relying on trustee discretion as to how the death benefits are distributed.
Superannuation Law and the governing rules of the superannuation fund provide strict guidelines for how binding death death nominations are made. It is important to have a nomination that meets these rules so at the date of death the trustee is required to comply with the nomination.
Whilst your financial adviser can guide you through this process and ensure the binding death benefit is made correctly, it is still prudent to pay attention to the requirements especially if you have not sought professional advice (eg are completing your own binding death nomination for a group life insurance policy within your superfund).
You are required to provide a nomination that is clear and valid. You are also required to provide a nomination in writing that is signed and dated by 2 witnesses in the presence of two adult witnesses, neither of whom is a nominee under the notice. A declaration must also be signed and dated by both the life insured and the 2 adult witnesses stating that the member signed the notice in their presence.
It is important to ensure nominations are regularly reviewed against the superannuation definition of a dependant and there may be tax implications. This is especially important where there are changes in family circumstances or structure. Also make sure that percentages are clear and add up to 100% and that the dates of the declaration are the same for both witnesses and the insured person making the binding death beneficiary nomination.
If you currently have a Life insurance policy you would like reviewed or are looking to take out cover please don’t hesitate to get in touch on 1800 737 926 or complete the contact form online.
The information provided here is general only and does not consider your personal objectives, financial situation or needs. Before you decide to purchase a product, it is important to read the relevant PDS.