Nominated Beneficiary

Nominated beneficiary provisions in Australian life insurance create important legal and practical distinctions between policy types. For standalone (non-superannuation) policies, nomination is straightforward: policyholders complete beneficiary designation forms naming individuals or entities with their relationship and percentage allocation if multiple beneficiaries. These nominations are generally binding on insurers, who must pay nominated parties subject to verification of identity and eligibility. Multiple beneficiaries can be nominated with specific percentage allocations (e.g., spouse 50%, two children 25% each), or contingent beneficiaries if primary beneficiary predeceases the insured. Superannuation-based policies involve more complexity due to SIS Act requirements. Binding death benefit nominations (BDBN) legally compel trustees to pay nominated beneficiaries, requiring specific documentation: written nomination, signed by member, dated, witnessed by two adults who aren't beneficiaries, nominating only eligible dependents or estate. These nominations lapse every three years unless renewed, though non-lapsing BDBNs are increasingly available. Non-binding nominations guide trustees but don't compel payment; trustees retain discretion to pay other eligible beneficiaries if circumstances warrant (e.g., financial hardship of non-nominated dependent child). The nomination process requires understanding eligible beneficiaries under Tax Act and SIS Act: spouses (legal or de facto), children (any age), financial dependents, interdependency relationship parties, or the estate. Insurers and super funds provide specific forms and guidance to ensure valid nominations. Recent industry focus on beneficiary nominations stems from cases where outdated or invalid nominations caused unintended consequences, such as divorced spouses receiving benefits or estate proceeds facing unnecessary taxation. The FSC and ASIC encourage regular nomination reviews, particularly following major life events: marriage, divorce, births, deaths of previously nominated persons, relationship changes, or changes in financial circumstances of potential beneficiaries.