Life insurance is an important part of the estate planning process, enabling you to provide a financial safety net for your loved ones in the event that the unthinkable happens.
Most superannuation funds offer life insurance to their members, although people can take out a separate policy if they want extra cover. More than nine in 10 Australians said their life cover gives them peace of mind, according to the Real Insurance Family Protection Survey.
But do you know what happens to the policyholder’s life insurance money after they die? Were you aware that life insurance settlements could be subject to family provision claims?
Can I claim against a loved one’s insurance policy?
Life insurance payments are often sizeable, but they are only usually open to family provision claims if they are part of the deceased’s estate.
Whether or not a policy is deemed accessible will depend on:
- The type of insurance policy;
- Whose name the policy was held in; and
- Whether there were binding nominations in place.
A binding nomination within an insurance policy ensures that the money is paid out to the person named as the beneficiary. Failing to appoint nominated beneficiaries could instead result in the cash being included as part of your estate.
However, providers are increasingly looking to prevent family provision claims on customer policies. This means a growing number of policies are written specifically to ensure payouts are distributed to the intended beneficiaries.
If you are planning to contest a will, you should seek legal advice to check whether money payable from a life insurance policy can be considered an estate asset.
Contact a contesting wills lawyer
Inheritance disputes can be complex and the courts have wide-ranging powers to designate a person’s assets as ‘notional estate’ if there are adequate reasons to do so, making them available to distribute.
For example, a judge may feel that the writer of the will was intentionally transferring assets out of their estate in order to avoid fulfilling their obligations to dependants.
You should therefore contact an experienced contesting wills lawyer to discuss whether or not a life insurance policy is open to a family provision claim.
Gerard Malouf & Partners Will Dispute Lawyers has considerable experience handling family provision claims across Australia, so please get in touch with a member of our team.