Living with a policy · Ring II
Who receives the money
Who receives a life insurance payout depends on where the cover sits. Cover held inside super is paid as part of a super death benefit, and unless you have a valid binding nomination the fund’s trustee decides which of your dependants, or your estate, receives it; for cover outside super, Moneysmart says that if you haven’t named a beneficiary, your estate decides where the money goes.
General information, not advice. Nomination rules differ between super funds and policies, so check the forms and product disclosure statement for your own cover. The official guides are Moneysmart on who gets your super and the ATO on super death benefits; a lawyer can advise on how a nomination fits with your will.
Why this ring matters
Money in your super account does not automatically form part of your estate, which is why Moneysmart suggests telling your super fund who should receive your super and any life insurance held in it. A will does not automatically cover super either.
Almost 60% of super members had no beneficiary nominated at all, and only 10% had a binding nomination.
That finding comes from ASIC’s 2025 report into how super trustees handle death benefit claims, as Moneysmart reports it, and Moneysmart notes that it increases the average time it takes to finalise a claim. Moneysmart also says a binding nomination can speed up the time it takes to pay out super.
The kinds of nomination in super
Moneysmart describes four main types. Not every fund offers every type.
| Nomination | Does the fund have to follow it? | Does it expire? |
|---|---|---|
| Binding, lapsing | Yes, the fund must pay your nominated eligible beneficiary. | Yes: it needs renewing or changing every 3 years, otherwise it expires. |
| Binding, non-lapsing | Yes, the fund must pay your nominated eligible beneficiary. | No. |
| Binding reversionary | Can apply once super has become an income stream such as a pension; the beneficiary can keep receiving it as an income stream. In some cases it can’t be changed once made. | Not stated by Moneysmart. |
| Non-binding | No. It guides the trustee, who still decides. | Not stated by Moneysmart. |
Each fund sets its own rules on when a binding nomination becomes invalid, and those rules are on the nomination form. A binding nomination that is no longer valid is normally treated in the same way as a non-binding one. Without a valid binding nomination, Moneysmart says, the trustee decides who receives your super, within the rules of super law.
Who can be a beneficiary in super
Whatever kind of nomination you make, super law limits who the fund can pay. Moneysmart lists your current spouse or partner, your children of any age, someone in an interdependency relationship with you, anyone financially dependent on you when you die, and your legal personal representative (your estate).
The ATO sets out the same idea in law’s terms. It also explains that super law decides who a death benefit can be paid to, while tax law decides how it is taxed, and the two define “dependant” a little differently.
A dependant under super law
- a spouse or de facto spouse (of any sex)
- a child of the person who died, of any age
- a person in an interdependency relationship with them
A dependant under tax law
- a spouse or de facto spouse, or a former one (of any sex)
- a child under 18
- a person in an interdependency relationship with them
- any other person dependent on them
An interdependency relationship, under super law, means two people who have a close personal relationship, live together, and where one or both gives the other financial support and domestic support and personal care. The ATO says a child over 18 must have been financially dependent on the person to count as a dependant for tax purposes.
If you want to leave super to someone who is not a dependant under super law, the ATO suggests asking your fund about a binding nomination to your legal personal representative, so the money is paid according to your will. Moneysmart adds that if you nominate your legal personal representative, it is important your will is up to date.
How it is paid
A death benefit paid to a dependant can be a lump sum or an income stream; to someone who is not a dependant, it must be a lump sum. Children can receive an income stream only if they are under 18, or under 25 and financially dependent or living with a permanent disability.
Making or changing a nomination
Moneysmart’s steps, in short:
- Check with your fund that you can make a nomination, and which types it allows.
- Find out how it is done: online, or on a form.
- Make sure the people you nominate are eligible to be paid your super.
- Follow the instructions carefully, including any signatures and witnessing. Mistakes can make a nomination invalid.
- Read when the nomination might become invalid. A lapsing nomination expires after a set time, and a calendar reminder can help.
- Review it when your circumstances or wishes change. Moneysmart suggests your fund’s annual statement as a good reminder.
In most cases, apart from reversionary nominations, you can change a nomination whenever you want, and you can nominate more than one eligible person to share the benefit. The ATO recommends completing its Super Health Check at least once a year, including the step on checking your nominated beneficiary.
When the nomination should change with you
Moneysmart’s life-event guides return to nominations again and again: review your super beneficiaries when you marry or formalise a relationship, check they are up to date when you have a baby, and check super nominations and any beneficiaries listed on insurance policies when you separate. After losing a partner, when you feel ready, it suggests reviewing your own super beneficiaries and insurance policies. More on these moments is in reviewing cover as life changes.
Cover held outside super
Moneysmart’s description of death cover is that the money goes to the people you nominate as beneficiaries on your policy. It says it is important to nominate who you want the money to go to, and that if you haven’t named a beneficiary, your estate decides. Moneysmart’s separation checklist includes reviewing beneficiaries listed on insurance policies, and for questions about a policy it suggests calling the insurer or your super fund.
If you are not sure how best to arrange a super death benefit, Moneysmart suggests you may want legal advice.