Who Will Get Your Life Insurance Proceeds?

Who will get your life insurance proceeds depends on who is the owner of life insurance policy - the person to whom the policy is issued, or the third party, such as superannuation fund trustee, lending institution or employer.

Self-Ownership Life Insurance

Self-Ownership life insurance policies (non superannuation) for a standard life insurance, TPD and trauma cover policy the proceeds would be paid to:

  • The specified beneficiary or beneficiaries.
  • If there is no record of a beneficiary then the proceeds go to the policy owner, or upon death the proceeds will go to the owner's estate.

Life insurance policy ownership

If there is no beneficiary nominated, then the proceeds go to the policy owner.

If the policy owner wishes their spouse to receive the life insurance proceeds then they need to own the life insurance policy and there must be no other nominated beneficiaries.

If the husband and wife divorce and the wife has been nominated as the beneficiary then this can sometimes prove difficult. This would result in the matter having to be addressed in any property settlement.

Nomination of a beneficiary in a life insurance policy

If you wish the death benefit to be paid to someone other than yourself then you need to nominate the beneficiary or beneficiaries and state the amount payable to each on the death of the life insured.

Superannuation owned life insurance policies

With a life insurance policy including death, TPD and trauma policies that are superannuation owned policy proceeds are payable to the policy owner, namely the superannuation fund, in the event of a claim being payable.

The proceeds of the policy will then be paid to the fund member in the event of TPD or trauma subject to a condition of release being satisfied or to the member's estate, or dependant beneficiaries in the event of the member's death.

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Published on April 4-th, 2010 in Life Insurance
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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Any information or advice contained on this website is general in nature and has been prepared without taking into account your objectives, financial situation or needs.

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