Death benefits: what happens when you die
It’s a situation that is inevitable but not one we always anticipate. Have you wondered what happens to your assets when you’re no longer around?
If you have death cover, the payout to your beneficiaries will be comprised of both the death cover and the account balance. If your account does not have death cover, then only the account balance will be paid, but how do you make sure it gets into the right hands?
If you’re under 70 years of age, death cover is provided as a default when your account is created by a participating employer. Typically, this cover is unit-based and starts to decrease from the age of 39 until it cuts out completely at your 70th birthday. The premiums are paid out of the account balance and the only things you have to worry about is making sure you’re adequately covered and that your beneficiaries are set up correctly.
You can check your level of cover at any time by logging into your online account. Working out how much cover you need should take your and your dependent’s living expenses into account, along with any outstanding debts and financial commitments. To make sure your bases are covered, use our insurance calculator, or speak to a financial adviser. There are circumstances where your insurance may cease, refer to the relevant Product Disclosure Statement for further information.
Who gets your superannuation
The process of claiming the death cover and account balance from superannuation can take a few weeks, sometimes longer depending on the complexity, so the money won’t typically be ready by the time the funeral costs come around. Much of the complexity arises from the type of beneficiary you hold on your account, so make sure your nomination is up to date and valid.
If you make a valid binding death benefit nomination, Vision Super has to distribute your benefit to your dependants according to your wishes. You cannot make a binding nomination online – we have to receive the original signed form, and you need to update the nomination every three years so it remains valid.
You can only nominate very specific people including your spouse, child, or someone with whom you have an interdependent relationship. If you want to nominate someone else, you have the option of nominating your legal personal representative as your beneficiary and leave instructions for your money in your will. Estate planning can be a complex matter, and we recommend seeking legal advice if you wish to take this option.
Using Vision Online is the quickest way to nominate your preferred beneficiaries. Nominating your beneficiaries assists us to understand how you would like any death benefit entitlement distributed to your dependants if you die. A preferred beneficiary nomination indicates your preference and is not binding on Vision Super, which means the fund ultimately decides on how to distribute your benefit.
In the event that you don’t have a nomination, Vision Super will decide who receives your death benefit in accordance with our trust deed and superannuation legislation, by paying to either any ‘dependants’ or your estate for distribution according to your will (or both).
You can nominate one person to automatically receive your Vision Income Stream after you die (that is, the nominated person will receive your pension). This person is called a reversionary beneficiary, and the nomination is binding. Your reversionary beneficiary must be a dependant for superannuation purposes. When you die, your nominated reversionary beneficiary will receive the remaining balance of your Vision Income Stream as regular income payments, or as a lump sum.
Important note: You can only nominate your reversionary beneficiary at the time you start your Vision Income Stream. Once selected, you cannot change your reversionary beneficiary nomination except in limited circumstances (such as the death of the reversionary beneficiary, or divorce).
A financial planner will put together a plan to keep you on track to help you meet your retirement goals and provide personal advice on how to build your wealth. A qualified financial planner can assist by taking a holistic approach towards your hard-earned money by assessing your current financial situation, needs and wants for both the short and long-term.
It’s never the wrong time to seek advice so don’t just leave it until there’s been a significant change in your circumstances. At Vision Super our specialists are qualified experts when it comes to your super. And, as an Industry Super fund, our planners don’t receive any commission or bonuses.
A small decision you make today could make a world of difference to you and your family in the future.