What is a beneficiary and how do I nominate one?

A beneficiary is the person or entity who receives the life insurance payout when you die. You nominate them either directly on a retail policy or via a binding or non-binding nomination on a super-held policy. The rules differ materially between the two structures.

This is general advice only. Outside super, you nominate anyone you choose. Inside super, only SIS Act dependants or your legal personal representative (estate) can receive the benefit directly.

Outside super (retail policies on the panel)

For retail Life Cover, you nominate beneficiaries directly on the policy. You can choose:

• One or more individuals (spouse, children, parents, friends)
• A company or trust
• A charity
• Your estate (legal personal representative)

Multiple beneficiaries can each receive a stated percentage. The insurer pays the beneficiary directly on claim, bypassing your will and probate. If no valid nomination exists, the benefit is paid to your legal personal representative and flows through your estate.

See TAL Accelerated Protection PDS (12 December 2024), nomination section: "If the Policy is structured outside superannuation and you have validly nominated one or more beneficiaries to receive a benefit under Life Insurance, we will pay the benefit in accordance with your nomination. Otherwise, all payments made by us under the Policy will be made to you, or if you have died, to your legal personal representative." See also AIA Priority Protection PDS (Version 32, 9 November 2025), Section 9 area for the Superannuation Plan equivalent.

Inside super: SIS Act rules apply

For super-held Life Cover, the SIS Act 1993 (s10) restricts who can receive a death benefit directly. Eligible dependants are:

• Spouse (including de facto and same-sex partner)
• Child of any age (including adopted, step, and ex-nuptial)
• A person financially dependent on you at the date of death
• A person in an interdependency relationship with you
• Your legal personal representative (your estate)

If the trustee pays a death benefit to someone who is not on this list, the payment can be challenged. To direct the benefit to anyone outside the SIS dependants list (e.g. a sibling, a friend, a charity), the nomination must direct payment to your estate, and your will then directs distribution.

Three nomination types in super

| Nomination type | Effect | Renewal | |---|---|---| | Binding (lapsing) | Trustee must follow; legally binding | Expires after 3 years; must be renewed | | Binding (non-lapsing) | Trustee must follow; legally binding | Permanent until changed; not all funds offer this | | Non-binding | Trustee considers but has final discretion | No expiry; trustee decides at claim |

Not every fund offers all three types. Check the fund's product disclosure statement for the available options and the form to use.

Where each panel insurer documents nomination

• AIA: For Superannuation Life Cover Plan inside AIA Insurance Superannuation Scheme No 2, members can make either a Non-lapsing Binding Nomination or a Non-binding Nomination on the application or by later submission. See AIA Priority Protection PDS (Version 32, 9 November 2025), Section 9 nomination provisions.
• Zurich: Standard binding and non-binding nomination options. Zurich Wealth Protection PDS (1 November 2025) covers valid and defective nomination treatment.
• TAL: TAL Super offers Non-Binding and Binding Nominations; binding nomination valid for 3 years. See TAL Accelerated Protection PDS (12 December 2024), Section 9 nomination area.
• OnePath: OneCare Super applies SIS-compliant binding and non-binding nomination. See OnePath OneCare PDS (1 October 2025).
• ClearView: Standard SIS-compliant nomination on the ClearChoice super option.
• NEOS: Trustee-administered binding and non-binding nomination per SIS Act for the super option.
• Encompass: Trustee owns the policy on the member's behalf; nomination follows fund rules. See Encompass Protection PDS (26 September 2025).
• Acenda: Acenda Insurance (Super) trustee is Equity Trustees Superannuation Limited; SIS-compliant nomination applies.
• Futura: Trustee-administered nomination per SIS Act for the super option.

Tax on the death benefit

The tax position depends on the recipient and the structure. References are ITAA 1997 ss302-195 and 302-200.

• Outside super, to any beneficiary: tax-free.
• Inside super, paid to a tax dependant (spouse, child under 18, financial dependant, interdependency): tax-free.
• Inside super, paid to a non-tax dependant (typically an adult child not financially dependent): the taxable component is taxed at 17% (15% plus Medicare levy) if paid from a taxed fund; up to 32% from an untaxed source.

The non-tax-dependant rule is the most common trap. Adult children inheriting a super-held death benefit can face material tax. Retail Life Cover outside super avoids this entirely.

When to review

Review the nomination after every major life event:

• Marriage or de facto relationship change
• Divorce or separation
• Birth or adoption of a child
• Death of a previous nominee
• Substantial change in financial dependency (adult children leaving home, parent becoming dependent)
• Establishing or updating a will

A lapsed binding nomination on the super side reverts to trustee discretion. Set a calendar reminder for the 3-year renewal if you hold a lapsing binding nomination.

Common considerations

• Keep a copy of the nomination form with your estate-planning records.
• Tell your beneficiaries (or your estate executor) about the policy. Claims are easier when the family knows what to claim.
• Discuss complex structures (blended families, financial dependants outside the immediate family, charitable bequests) with a solicitor and a licensed insurance adviser working under general advice.