Who you can name as the beneficiary of your insurance benefit will depend on a few factors, including whether your policy is held inside or outside super.

Understanding beneficiary rules inside and outside super

When a life insurance claim is approved, the payment an insurer makes is called a benefit. The recipients of this benefit are known as beneficiaries. 

As a policy owner, who you can name as the beneficiary, or beneficiaries, of your insurance benefit will depend on a few factors, including whether your policy is held inside or outside super.

Who can I name as a beneficiary on my policy?

Outside super, your options are reasonably open

If your insurance policy is held outside super, you can leave your benefit to one or more people. This could be your spouse or children, your siblings, parents, a close friend, business partner – or almost anyone else you choose.

You can also leave the benefit to your estate, where the executor or administrator will distribute the benefits according to your will – or whoever else may be legally entitled to it.

Inside super, the rules are a bit more complex

If you hold your insurance policy inside super, things get a little trickier.

In this scenario, the trustee of your super fund owns your insurance and is bound to abide by superannuation law. Under this set-up, your beneficiary (or beneficiaries) must be:

• your current spouse (including de facto and same sex partner)
• your children including step and adopted children
• someone who is financially dependent on you at the time of your death, or
• someone in an interdependency relationship to you
• your legal personal representative (the executor of your will or administrator of your estate).

The tax treatment of super death benefits is also different – so the payout your beneficiaries receive might not be tax-free. For example, if you leave your life insurance to an adult child, or if it’s paid as an income stream, like a pension, your beneficiary may have to pay tax. It’s important to seek advice from a financial adviser, or a tax or legal consultant to understand how this may apply to your situation.

There are also two ways to nominate beneficiaries inside super: a binding or non-binding nomination.

Binding vs non-binding nomination

Binding: The trustee must follow your instructions. 
Non-binding: The trustee considers your wishes but makes the final decision.

Binding nomination
Much as the name suggests, a binding nomination means your super fund trustee is bound to honour your chosen beneficiaries – as long as it’s valid at the time of death. Without a valid binding nomination, the trustee can pay benefit entitlements to beneficiaries at its discretion, which may mean it doesn’t end up being distributed as you intended. This article explains what you can do to make sure your benefit goes to the right person.

Depending on your insurance product, binding nominations can expire after three years or be non-lapsing (i.e. the nomination does not expire).

You'll need to complete a binding death benefit nomination form to make this kind of beneficiary nomination. At Acenda, our beneficiary nomination form allows you to create binding or non-binding nominations.

Non-binding nominations
Like a non-lapsing binding nomination, a non-binding nomination never expires. However, a trustee isn’t bound to honour your preferences.

So, while the trustee of your super fund will do its best to consider your wishes, they’ll also get the final say over who will receive your benefit (within the bounds of the law).

It's therefore always a good idea to regularly review your beneficiary nominations, keep them up-to-date, and have these wishes recorded by both your super fund and insurer.

How often should I review my beneficiaries?

If there’s one certainty in life, it’s that things change over time. There’s no hard-and-fast rule around how often you should review your beneficiaries, but a good rule of thumb is to check your beneficiaries when significant life events occur. This helps to ensure your loved ones are taken care of and that your insurance benefit will go where you want it to.

Life events that may tell you it’s time to review your beneficiaries

• Getting married
• Getting divorced
• Having children – or welcoming additional children into a blended family
• The death of a loved one.

As with all things insurance, it’s important you read the Product Disclosure Statement (PDS) to understand the specifics of your policy. In this document you’ll find more information about nominating beneficiaries and how benefits are paid by cover type. You should also speak to your financial adviser and tax or legal consultant about your wishes, including making a will and having insurance benefits paid to your estate.

When things take a turn, we help you stay on track

At Acenda, we’ve been helping Australians take life on with market-leading life insurance solutions for over 135 years. In 2024, we approved over 94% of individual claims, paying $802 million in benefits to over 5,400 customers when they needed it most.

Learn more about our claim process.