What will happen if things go wrong?

Jul 18, 2016

Death and insurance can make for emotional discussions. But they’re necessary ones.

If you don’t nominate beneficiaries for your superannuation death benefit (which includes your super balance and any applicable death cover insurance) then things could get complicated if you die and you haven’t made your wishes clear with your super fund.

When it comes to the payment of your superannuation death benefit in the event of your death, you can choose between a binding and a non-binding death benefit nomination.

If you’ve made a non-binding death benefit nomination,your super fund will use it as guidance, however they will have the final say on who receives your death benefit. If you have made a valid binding death benefit nomination, what you said will be final and the fund will need to follow your instructions.

Think about your options and don’t forget about this key, essential feature of your super.


Give your insurance cover some love

Did you know that unless you opt-out of insurance when you join your super fund, you may automatically be covered by a level of death and disablement insurance? Some funds even offer automatic default income protection cover.  You can increase or decrease the level of cover to suit your needs.

It’s a fantastic feature of your superannuation membership and when people learn about it they usually value it very highly. The premiums you pay are generally much lower than the premiums you would pay for this type of insurance if you purchased it yourself on a retail basis. This is because your super fund buys the insurance in bulk on behalf of a group of many thousands of members.

Your insurance cover means that you could get a payment if you’re totally and permanently disabled through injury or illness or your beneficiaries should receive a payment in the event of your death. If you have income protection insurance cover, you could receive regular income payments if you are unable to work due to injury or illness. 

It’s a good idea to check what type and how much cover you have.


Who will get your money if you die?

If you die, your superannuation account balance and any death insurance benefit you are eligible for will be paid to your dependants or your Legal Personal Representative/s.

Many people think that the death benefit would automatically be paid to the people named in their will, but it doesn’t necessarily work that way. If you don’t give your super fund any instructions then they will need to make an informed decision on your behalf about who receives the money. If the payment goes to someone you didn’t want it to, this could cause real problems within your family.


You can have a say in it

If you want your death benefit paid to a particular person or people you can lodge a binding nomination or a non-binding nomination on your beneficiaries with your super fund. 


Non-binding nominations – the super fund still has the final say

When you join your super fund and at any time after that, you have the opportunity to nominate your beneficiaries for your superannuation death benefit. Super funds normally pay death benefits to one or more of the following dependants or to your legal representative/s.

- Your spouse (including de-facto and same-sex partners)
- Your children
- People with whom you had an interdependent relationship
- People who depend on you financially.

A non-binding nomination provides guidance to your super fund on who will receive the death benefit, but it’s important to be aware that the fund still has the final say on who receives the payment. They will want to ensure the benefit is paid to someone who was dependant on you in some way.  


Binding nominations – you have the final say

If you want to be completely certain about who will receive your death benefit you can make a binding death benefit nomination by completing the necessary form with your super fund.

If you have a current valid binding death benefit nomination in place at the time of your death, generally your super fund will not have any choice as to how your benefit is paid and it will have to follow your instructions.   However, there are limited circumstances where your super fund may not be able to follow your binding death benefit nomination - for example if there is a court order preventing payment of benefits.

When you make a binding death benefit nomination you need to choose whether the money goes to:
- one or more of your dependants
or
- to your Legal Personal Representative, who must pay the money according to your will. 


Important: binding nominations need to be updated every 3 years

An important factor to be aware of is that binding nominations expire every three years and therefore need to be reviewed regularly. If you die and your binding nomination is out of date or has lapsed then your super fund will ultimately need to decide who receives your death benefit.

Therefore, if you decide to have a binding nomination you need to be prepared to keep it up to date and renew it at least every three years. The key thing to remember is to update your binding nomination when your circumstances change – for example, if you divorce or have additional children.  


Talk it over with your loved ones

Before you decide who to nominate and which type of nomination to make, it’s a great idea to have a discussion with your close family members about what they think would need to happen to your benefit if you died. 


Talk to GuildSuper

If you’re in any doubt about which approach is most suitable for you, contact GuildSuper and we can tell you more about the considerations when death benefits are paid and we can help you fill out the necessary forms.


We’re here to help 

Check your details

To check your beneficiaries and whether you have a binding or non-binding nomination, log into your account, check your latest GuildSuper Annual Benefit Statement or call GuildSuper on 1300 361 477

Visit the GuildSuper Learning Centre

To find out more about insurance options or to work out how much insurance cover you need,use GuildSuper’s easy Insurance Needs Calculator in GuildSuper’s online learning centre

Download a form

Download a Binding Death Benefit nomination form here.

This document contains general advice only and doesn't take into account what you currently have, want and need for your personal circumstances. It is important for you to consider these matters and read the Product Disclosure Statement (PDS) before you make a decision about a superannuation product. You can get a copy of the GuildSuper PDS by calling 1300 361 477or by visiting guildsuper.com.au. You may also wish to consult a licensed or appropriately authorised financial planner. Guild Trustee Services Pty Limited ABN 84 068 826 728 AFS Licence No. 233815 RSE Licence No. L0000611 as Trustee of the Guild Retirement Fund ABN 22 599 554 834 (which includes GuildSuper) My Super Authorisation No. 22599554834526