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Life Insurance Beneficiary Rules Australia

You can nominate anyone as your life insurance beneficiary — you’re also free to make changes further down the line.

What you need to know

  • It is common for a spouse or children to be nominated as a life insurance beneficiary. To get a payout, the beneficiary must be over the age of 18.
  • If a beneficiary you have nominated dies, contact your insurer and nominate someone else. Otherwise, your payout goes to your estate and is distributed according to your will.
  • If you take out life insurance through super, a payout can be slower as it first gets paid to the fund trustee. For more control, make a binding death nomination.

What is a life insurance beneficiary?

A life insurance beneficiary is the person, or persons, you nominate to receive your life insurance payout when you die.

You choose your beneficiary when you take out a policy (though you can change it further down the line) and you're able to select how much you'd like each person to receive, if you have more than one person you'd like to nominate.

How to change a life insurance beneficiary

Number 1

Contact your life insurer

Changing life insurance beneficiary or beneficiaries is fairly straightforward for policyholders. Contact your insurer and let them know you'd like to make changes to who receives the payout.

Number 2

Fill out the necessary documents

Most insurance providers will require you to fill out a change of beneficiary form. You can usually do this online; others will require you to print them out and mail them through to them.

Number 3

Send to the insurer

Send the updated beneficiary information to your insurer. They should confirm with you when they've received and updated your nominated life insurance beneficiaries.

How are life insurance benefits allocated?

Life insurance benefits can be allocated among your beneficiaries however you wish. Below is an example of how you might allocate your life insurance payout if you had four beneficiaires:

Nominated beneficiaryAllocation
Spouse40%
Child 120%
Child 220%
Child 320%

How to find out if you're the beneficiary of a life insurance policy

If you think you're the beneficiary of an unclaimed life insurance policy, you can do the following:

  1. Do an unclaimed life insurance search via ASIC unclaimed money.
  2. Find and contact the life insurer (if your name appears in the search).
  3. Begin the claims process.

Who gets the life insurance payout if the beneficiary is dead?

Single

Another beneficiary

If a beneficiary you have nominated dies, you should contact your insurer and nominate someone else. Remember, don't assume the benefit will be automatically reallocated if you have other nominated beneficiaries – it might not. You'll need to contact the insurer and do that yourself.

Private contract

The people in your Will

If you don't nominate another beneficiary, your life insurance payout will go to your estate and be distributed according to your Will, provided you have one in place. If you die without a Will, you leave what is called an "intestacy" which means your payout will be distributed by the state government based on a legal process.

Don't have a will? Here's how to get one

Number 1 Get a solicitor to write your will

You could seek legal help to get peace of mind your will is valid and has been drawn up properly. Getting a solicitor or lawyer to draft a will on your behalf will be a more expensive option. They can charge anything from a few hundred dollars to more than a thousand bucks. Costs vary depending on your circumstances, including where you live.

Number 2 Create a will online (and get it checked)

Another option you have is going through an online legal service. This can cost upwards of $200 and may include a basic will service that is reviewed by a legal expert. Alternatively, there are DIY will kits. These can be even cheaper, but you may well want to get these checked by a legal professional to ensure the validity of such an important document.

Is there a difference between life insurance and super beneficiaries?

Yes, if you take out life insurance through super, you need to be aware of the following:

  • The benefit goes to the trustee first. A superannuation life insurance benefit payment will be paid to the fund trustee, who will then distribute it to the beneficiaries. This can result in delays.
  • A binding death nomination. This means the super fund trustee must pay your life insurance benefit to the person or persons you nominate as your beneficiary. You need to make a binding death nomination with super or the trustee will distribute the benefit to your dependents as they see fit, which may not necessarily be as you'd like.
  • Tax may apply Benefit payments may be subject to tax depending on whether the beneficiaries are defined as financially tax dependent or not, whether it is paid as a lump sum or income stream and whether the super is tax-free or taxable, and whether the super fund has already paid tax on the taxable component.

How does policy ownership work?

When you take out a life insurance policy, you'll often have a few different ownership options. This determines who has total control over the policy. For example, the policy owner (or policyholder) can change the beneficiaries on the policy. They're also responsible for paying the premiums.

The most common policy ownership options include:

Ownership typeOverview
Self ownershipThe life insured owns their policy.
Cross ownershipThird party ownership where someone else, often your spouse, owns the policy.
Joint ownershipYou still have some control over your policy, but you won't be able to make any decisions without your partner, who jointly owns the policy.
Super fund ownershipThe trustee of your super fund owns the policy. Any changes will need to be processed by the fund.
Tenants-in-common ownershipWhere benefits are received by the owner in proportion to their share in the policy. Not offered by many insurers these days.
Business entity ownershipWhere the policy is held for a revenue purpose. Here the business can claim a tax deduction for the premium and have the proceeds under its control.

Compare life insurance quotes from these direct brands

1 - 8 of 15
Name Product Maximum Cover Maximum Entry Age Terminal Illness Benefit Claims Acceptance Rate Average Claim Time Sum Insured
TAL Accelerated Protection Life Insurance
No set limit
73
Not stated
Data not available
1 months
$249,285 million
Our verdict: One of Australia's leading life insurers. Automatically includes child critical illness cover. Plus, it comes with a level premium option (e.g. costs remain similar as you get older).

⭐ Current offer: Get up to 15% off your TAL Life, Trauma or TPD insurance policy for life - if you have a Body Mass Index (BMI) between 19 and 28 at the time of your application. Offer T&Cs on insurer website apply.
Medibank Life Insurance
$2,500,000
70
$2,500,000
Data not available
Data not available
Data not available
Our verdict: Medibank offers a higher payout limit ($2.5 million) than 15 other providers. Get a 10% discount if you're already a Medibank Health Insurance member.
NobleOak Life Insurance
$25,000,000
74
$25,000,000
96.90%
1.1 months
$24,483 million
Our verdict: Finder Life Insurance Award winner for the last 5 years in a row. Good value for money, simple application process and a high claims acceptance rate.
ahm Life Insurance
$1,500,000
55
$1,500,000
Data not available
Data not available
Data not available
Our verdict: ahm offers a simple application process. You can be approved online or over the phone. There are no medical or blood tests needed.
RACWA Life Insurance
$25,000,000
74
$25,000,000
96.90%
1.1 months
$24,483 million
Our verdict: RAC’s maximum death cover limit of $25 million is one of the highest limits you’ll find, including $5 million in TPD insurance. You can get an online quote, but you’ll need to call RAC to get trauma cover. Benefit from added peace of mind with fully underwritten insurance. RAC is also WA-based but services all of Australia.
AAMI Life Insurance
$1,500,000
65
$1,500,000
Data not available
3.1 months
$37,768 million
Our verdict: There’s flexibility with AAMI as you can add another adult to your cover, with a competitive limit of $1.5 million. Easy application process with no medical exams.

⭐ Current offer: Take out a new AAMI Life Insurance policy and get $100 eGift card after your first 4 months of cover. T&Cs apply. Ends June 30, 2024.
Suncorp Life Insurance
$1,500,000
65
$1,500,000
Data not available
3.1 months
$37,768 million
Our verdict: Competitive maximum cover limit of $1.5 million. Suncorp lets you change your cover amount by up to $100,000 after a big life event, such as having a baby.

⭐ Current offer: Take out a new Suncorp Life Insurance policy and get $100 eGift card after your first 4 months of cover. T&Cs apply. Ends June 30, 2024.
Real Family Life Cover
$1,000,000
64
$1,000,000
88.90%
2.4 months
$53,238 million
Our verdict: The application is simple; it can be done with 1 phone call and there are no medical exams. But households with larger debts may need more than a $1 million payout.

⭐ Current offer: Get back 10% of the premiums you’ve paid after 1 year.
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