Beneficiary nomination FAQs
Beneficiary nomination provides an alternative to setting up a plan trust.
It may be an option if your client's situation is more straightforward and they know who they currently want to benefit.
We'll automatically pay any benefit after your client dies to their nominated beneficiary. And there's no need for probate or the completion of a trust form.
For more complicated needs they should still consider a trust.
Beneficiary nomination FAQs
Can I go back into a plan that is waiting for a start date to complete the nominated beneficiaries?
No, the nomination can only be done as part of the initial submission of the application. To add nominated beneficiaries at this stage you'd need to complete a new application
Will the nominated beneficiaries process still provide the same IHT protection as the trusts?
It would provide the same IHT protection in the event of death, however any terminal illness claims would be paid to the plan owner and would form part of the taxable estate on death.
Does beneficiary nomination affect the ability to write covers separately for each individual under a menu plan?
If a couple separates but they want to keep their own cover, can they change the beneficiary?
Yes, and there's no complicated paperwork to complete to remove or change their nominated beneficiaries.
How does it work where the cover is in place to pay off a mortgage?
If there is no trust or nominated beneficiary the payment of the plan may be delayed while probate is obtained. The payment will then be made to the personal representatives not direct to the lender. It could therefore be several months before the mortgage can be repaid. Writing the plan in trust or nominating a beneficiary means the claim can be paid without probate so cash can be made available to repay the loan much quicker.
What about couples who are not married?
If they are each taking out their own cover then either a trust or nominating a beneficiary is almost essential as neither party is entitled to any of the other’s estate unless there is a will giving them that right.
Can a lender be named as a beneficiary?
No, our beneficiary nomination doesn’t allow you to name a lender as this would be a direct benefit to your estate as it would be meeting your liability. For beneficiary nomination to be effective you must not be able to benefit yourself.
Can you split the plan out for example, mortgage cover into a trust and separate life plan for child through beneficiary nomination?
If it’s a single plan you can’t have both beneficiary nomination and a trust at the same time. If you’re considering a trust for one part, then we would suggest all covers should be under trust.
Can beneficiaries be removed entirely?
No, once you have nominated a beneficiary you can change to someone else or write the plan under trust at a later date but you can’t remove all beneficiaries as to be effective it must not be possible for the plan to come back into your estate for your benefit.
Is it more beneficial that a couple who are not married have single life polices and nominate the other as the beneficiary?
Usually yes, especially if they don’t have wills as they would not be entitled to anything from each other’s estates.
If a plan is jointly owned and the benefit goes straight to a partner can we then put on the fact find that the plan is written in trust?
You can still recommend the plan is written under trust but unless it actually is, then you shouldn’t reflect anything other than that recommendation in the fact find as it isn’t in trust.
Can I put a Critical Illness Cover/Family Income Benefit first event into beneficiary nomination, and can the plan holder retain the CIC element?
Yes, any benefit that starts to be paid before they die will be paid to them and if they die after it has started to be paid will be paid to the person entitled to their estate. Any benefit that starts to be paid after they die will be paid to the nominated beneficiary.