The policy owners are the beneficiaries of all benefits paid under the policy. There is no mechanism to separately nominate beneficiaries.
For AIA Living policies (e.g. Life Cover, Critical Conditions, Progressive Care, Income Protection, Total Permanent Disablement, Family Protection), AIA will pay all benefits to the policy owner, or to the policy owner’s estate. If more than one person owns the policy then AIA will pay all benefits to the policy owners jointly or as they jointly direct, or to the survivor(s) of the policy owners. This is specified in section 1 of the AIA Living Umbrella Wording which forms part of the policy wording.
For example, upon the death of the person insured, any claim proceeds from a Life Cover or Family Protection insurance policy would be paid out as follows:
- If the person insured is the sole policy owner, the proceeds would be paid to the deceased person’s estate.
- If the policy is owned by one person who is not the person insured, the proceeds would be paid directly to the policy owner, bypassing probate and the estate of the deceased person. It should be noted that if the policy owner dies at the same time as the person insured, any proceeds would be paid to the estate of the policy owner.
- If the policy is jointly owned, the proceeds would be paid directly to the surviving policy owner(s), bypassing probate and the estate of the deceased person.
Life Insurance Beneficiaries
The ownership of your life insurance policy not only determines the person to whom any benefit is paid, but by law it governs the claims process which must be followed, and therefore the time required to pay a claim.
If your life insurance policy is owned either jointly or solely by another person (such as your partner), then on your death the insured amount is paid directly to the other person, without the need for Probate or Letters of Administration to be granted by the High Court. This is particularly helpful if the primary purpose of your policy is to provide for the financial upkeep of one or more of your dependants.
If, on the other hand, your life insurance policy is owned solely by yourself, then the claim proceeds must be paid to your estate. This cannot occur until the High Court has granted Probate or Letters of Administration, a process which can at times take several months to complete and delay any intended payment to one or more of your dependants. However, it may well be your intention (for whatever reason) that the claim proceeds are to be paid to your estate and therefore disbursed according to the terms of your will.
If you die without leaving a will the claim proceeds may be disbursed in a way that is entirely at odds with what you intended. In the first instance, a grant of Letters of Administration must be made by the High Court to a person who will act as the administrator of your estate. Your estate must then be dealt with in accordance with section 77 of the Administration Act 1969, which distributes your estate according to the family members who survive you. For example, if you have a spouse and children, your estate is disbursed in the following way:
- Your personal chattels (as defined in section 2(1) of the Administration Act 1969) pass to your spouse;
- The first $155,000 (plus interest) of your estate passes to your spouse;
- One-third of the remainder of your estate passes to your spouse, and two-thirds must be held in statutory trust for the benefit of your children.
It is therefore important that the ownership of your policy reflects your intentions as to how any claim proceeds are dealt with, and to whom they are paid.
Policy Ownership Requirements
Please note the following requirements regarding policy ownership:
- A policy can be owned by one person or owned jointly by two or more people.
- Each policy owner must be at least 16 years of age.
- Policy owners can be added or removed at any time by completing a Change of Ownership Form (see below).
- Any changes to the policy, including any change in ownership, must be approved by all policy owners at that time.
Change of Ownership Form
Changing the Ownership of Your Policy
To change the ownership of your policy:
Download and print the Change of Ownership Form.
Complete section 1 of the form (Policy details). It is important that you enter your policy number and date the form.
Complete section 2 of the form (Current owner(s) details) and ensure that it is signed and witnessed where required. Anyone over the age of 16 not connected to the policy can be a witness.
Complete section 3 of the form (New owner(s) details) and ensure that it is signed and witnessed where required. If any of the current policy owners are to remain as policy owners, their details must be included again in section 3.
Either email us a scanned copy (or a clear photo of each page) of the completed form or post the form directly to AIA at the address below:AIA New Zealand
Private Bag 92499
Victoria Street West
To process a change in ownership, AIA will also require a copy of some government-issued identification (such as a Driver Licence or Passport) from all existing and new policy owners to confirm your signatures. AIA will not require any form of identification from the witness(es).
Please note that we are unable to provide you with any advice as to who should be the policy owner or owners of a policy, or what the implications of your choice of policy owner might be. For this we recommend that you obtain the advice of a solicitor, particularly if you are unsure as to what to do or what you ought to do. A solicitor would also be able to advise you on the effects of ownership in relation to your will.