Life Insurance Beneficiaries - Who Gets Your Proceeds?

The person nominated to receive your life insurance payout is decided by you. During the application process, you will be asked who you wish to nominate as your beneficiary for the policy. This can be altered at a later date, should your life circumstances change.

Most people nominate their spouse or their children, but it is completely your choice. If you wish to nominate your grandchildren, your favourite niece, or your best friend, it is at your discretion who you choose. If however, you don’t nominate anybody, the payout will automatically be distributed to your estate. As majority of people tend to nominate their spouses, it can be a smart idea to have a will stating who you wish the money to be passed onto, in the event you were to both pass away at the same time. That way there are no legal battles or confusion over who the money goes to.

If you apply for life insurance as a couple, some policies automatically nominate your spouse as the beneficiary. If your policies are linked, there might not be an option for you to nominate others if you wish. These types of policies can get quite messy if your circumstances change and you are no longer together. You can both cancel the policies and apply for separate ones. Alternatively one of you could continue the policy, while the other applies for a new policy. Or you could even continue to keep your policy, if you are on good terms with your ex-spouse.

The same goes if you have your policy through your superannuation fund. You nominate a beneficiary to receive the payout for when you pass on, otherwise your money will be distributed to the estate.

In the unfortunate event you passed away with your beneficiaries, or had not nominated any, the government organises all of your remaining debts to be paid off with the life insurance proceeds. The government will then ensure your close family is looked after with the outstanding money. People who are considered include your spouse, children, parents and siblings.