It goes without saying, life insurance provides a valuable social good.
It’s designed to protect an insured person’s family (and others who may depend on them for financial support) should the worst happen by paying a death benefit to the beneficiary (or beneficiaries) of the policy.
There’s a lot of work that goes into setting up a life insurance policy to make sure the insured person’s needs and desires are met. After that, aside from making sure premiums are paid each year, it’s easy for clients to set and forget.
Why binding death benefit nominations are important
Life happens and things change. Sometimes for the better, sometimes for the worse.
People get married, have families, relocate, get divorced, remarry, lose their partners… you get the point. Which is why it’s essential for clients to regularly review and, if required, update the beneficiaries of their life insurance policy.
As you know, a binding death benefit nomination (BDBN) enables clients to nominate who will receive their insurance benefit in the event of their death. Importantly, these instructions are binding on the trustee regardless of whether the client’s family situation has changed in the meantime.
Given recent case laws around BDBNs, where an ex-spouse has succeeded in obtaining death benefits from superannuation against the wishes of the testator, ensuring these BDBNs are up to date is incredibly important.
Which is why all NEOS Super Plan death benefit nominations are lapsing – they must be renewed every three years to remain binding on the trustee. We strongly believe this is in the client’s best interest.
We encourage advisers to ensure their clients are reviewing and updating their binding nominations regularly.
Updating your clients’ BDBNs is easy
Like all things at NEOS, updating a BDBN is digital first and easy. Simply:
- Download a BDBN form
- Complete the form, outlining who the client wants to receive the death benefit from superannuation
- Sign and witness the form: making sure the two witnesses are aged over 18 and not a beneficiary nominated on the form, or it will be defective and the trustee won’t be bound by their wishes
- Email the completed form to customerservice@neoslife.com.au
The BDBN will apply to the super fund and trustees immediately.
As always, if you have any questions speak to your dedicated NEOS service consultant or BDM.