Some life insurers require the insured to nominate a beneficiary under the policy. Many people hold life insurance policies for many years during which a number of life circumstances may change.

Section 48A of the Insurance Contracts Act 1985 (Cth) enables a third party beneficiary under a life insurance policy to recover from the insurer any money that becomes payable under the policy, even though the third party beneficiary is not a party to the policy. The life insurer is contractually bound to pay the nominated beneficiary.

If personal circumstances change, most people immediately change their will. Section 4 of the Succession Act 2006 (NSW) says a person may dispose by will the property to which the person is entitled to at the time of the person's death. If there is a nominated beneficiary in the life insurance policy, then the proceeds of the life insurance policy is not property to which the deceased person or their estate is entitled to, at the time of the person's death.

So beware. If you change your will, then make sure you also identify the correct nominated beneficiary under your life insurance policy.

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