Partners Life has confirmed to advisers it will no longer allow nominated beneficiary requests to accompany its life insurance applications.
In a release to its adviser base this week, the insurer outlined its rationale for this decision, which noted that over the years Partners Life has received a small number of requests to include details of nominated beneficiaries on policies – but that in recent times, it has experienced a slight increase in these requests.
The statement notes the insurer has always held the view that advising nominated beneficiaries on life insurance applications potentially contradicts the laws affecting life insurance and could therefore be legally challenged:
Not being able to provide clients with certainty about the legality of a such a fundamental part of their contract is not appropriate…
“Not being able to provide clients with certainty about the legality of a such a fundamental part of their contract is not appropriate in our opinion, so as a result our policy has been not to accept such requests,” noted the statement.
Despite its long-standing preference not to accept nominated beneficiaries with new business, the insurer said its staff has occasionally agreed to accept them due to the sometimes competitive nature of life insurance new business circumstances.
It noted a range of factors why an adviser might think using a nominated beneficiary form would be valuable for a client, including:
- Avoiding having to set up multiple policies to achieve the desired outcome
- Avoiding nominating a Trust as a recipient when a Trust cannot be the legal owner of a life insurance policy
- Avoiding the proceeds of the policy being caught up in the administration of an estate
- Avoiding the need to put in place formal buy-sell agreements etc.
“However, our interpretation of the relevant legislation (insurance, property and estate) would mean that relying on a nominated beneficiary form is not legally certain,” noted the insurer in its statement.
“As such, we reiterate that Partners Life will no longer accept Nominated Beneficiary forms effective immediately.”
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