Life Insurance Beneficiary – How To Name A Beneficiary
Death is certain. You can never tell when it will happen, but you can plan ahead to ensure that your loved ones are well taken care of in your absence. In such occurrences, those left behind are often left to deal with not only the emotional and psychological trauma of loss, but also shouldering the massive burden of catering for things like funeral expenses, debts as well as other financial obligations.Therefore, it is wise to assess the impact your death may cause to those close to you and consider taking an insurance cover that will cushion your loved ones from the gravity of such situations.
Definition Of A Life Insurance Beneficiary
In a life cover, the life insurance beneficiary is defined as the person stipulated in the insurance policy agreement by the insured to receive the financial payout upon the death of the insured. In most cases, this is usually a close member or members of the family. You can therefore assign a member or members of your family, or whomever you may deem fit to receive the death benefit on your behalf. There is no particular criterion for nominating a beneficiary since everything is at your discretion.
Nominating A Life Insurance Beneficiary
The process of nominating a life insurance beneficiary is meant to ensure that the death benefit paid by the insurer is paid to the person or persons the insured finds deserving. Most insurance policies in Australia allow you to nominate a life insurance beneficiary or beneficiaries to whom you can allocate proceeds correctly at your discretion.
Nominating your beneficiaries is important as it legally binds the insurer to allocate the benefits according to your instructions. In the instance that you do not nominate a beneficiary to receive the insurance benefits, then the benefits will be paid into your estate and then distributed according to the terms of your will. However, if you do not have a will, then your estate will be subject to intestacy laws and this may result in financial strains for your family and those close to you. In the instance that your beneficiaries die along with you, the government will ensure that all the debts you have left behind are paid up and that your close family is taken care of by the balance.
In some instances, couples may choose to take a life insurance cover together. Such policies automatically nominate the other spouse as the beneficiary, in case one spouse dies. If the life policies are linked to other policies, then this might complicate the process of nominating other beneficiaries. Read: How To Get An Insurance Quote Free
Updating The Beneficiary Nomination
With time, things may change and this would probably prompt you to make a few changes to the policy regarding the beneficiaries, say in the event that a divorce, separation or death of a beneficiary like a spouse or partner occurs. This makes it important to ensure that you keep your beneficiary nomination information as up to date as possible. To make these changes, you will be required to visit their website or complete a Beneficiary Amendment form to update the nomination.