What is a life insurance beneficiary?

The definition of a beneficiary is the person, people or organisation you choose to receive the lump sum payout from your Tesco Life Insurance policy. Naming a beneficiary helps make sure the payout goes to the people it’s meant to protect. It’s one of the most important decisions you make when taking out life insurance.

If you’re new to life insurance, our guide explains what cover is and how it works. See our guide - What is life insurance?

You can name almost anyone you want to receive the money from the life insurance policy when the policyholder passes away. Many Tesco Life Insurance customers choose a partner, their children or close family members. You can also name friends or a charity.

If you choose more than one beneficiary, you can decide the percentage each receives. For example, half may go to your partner, with the rest divided between your children or a chosen charity.

If you’re thinking about naming children, remember they can’t receive the payout themselves until they’re 18. A trustee (person who is legally responsible for managing the policy and its payout) or guardian will manage the money for them until then. If you want more flexibility, placing your policy in a trust can help. To see how this works see our guide - Should you put life insurance in a trust?

Choosing beneficiaries is a decision that is personal to you, and you shouldn’t let anyone influence your choice. When it comes to selecting the right person or people, you may want to think about:

If you’re comparing different types of cover before choosing beneficiaries, see our guide - Types of life insurance explained.

It depends on how the policy is set up.

A trust can make the payout quicker and may help reduce inheritance tax, but it can limit how much you can change later. For more detail see our guide - Should you put your life insurance in a trust?

Beneficiaries are fixed once the trust is created.

Trustees select who receives the payout from a group of potential beneficiaries. You can update your expression of wishes over time.

Similar to a discretionary trust, but with named default beneficiaries.

The payout becomes part of your estate and is paid according to your will or the rules that apply to people who don’t leave a will (intestate). If you need to update who benefits, you must update your will.

For more detail see our guide - Should you put life insurance in a trust?

You may be contacted by:

It is worth noting that a life insurance beneficiary takes precedence over a will, due to the binding of the contract.

The time it takes to receive a payout from a life insurance policy can vary depending on several factors.

If the policy is in a trust

Payouts are often quicker, sometimes within a few weeks because the money doesn’t go through probate (this is the legal process that deals with someone’s estate).

If the policy isn’t in a trust

The payout usually forms part of the estate. Probate is required, which can take several months. More about this process is covered in our guide - How does life insurance work when someone dies?

Most life insurance payouts are free from income tax. If the policy isn’t in a trust and becomes part of the estate. Inheritance tax may apply depending on the value of the estate and the rules at the time. More information is available in our guide - Should you put your life insurance in a trust?

Yes, a beneficiary can be denied a life insurance payout under specific circumstances, however this is uncommon. The primary reasons it may be delayed or refused are if:

Beneficiaries may be asked to provide identification or documents to help confirm details.

If you don’t name a life insurance beneficiary and your policy isn’t in a trust, the payout becomes part of your estate and is managed through your will. If there is no will, the rules of intestacy decide who receives the money. This can cause delays because probate must be completed first.

A trust can exist without any beneficiaries. In this case, the trustees are responsible for deciding who should receive the payout, based on the terms of the trust and the circumstances at the time. This can give flexibility and help ensure the money reaches the right people quickly.

It’s usually helpful to let beneficiaries know they’ve been named. It’s useful to tell them where your Tesco Life Insurance documents are kept and who the insurer is. Keeping your will, trust documents and policy together can make the process easier when a claim needs to be made.

If the policy is written in trust, then the money will be paid to the trustees. If the policy isn’t written in trust, the life insurance money usually becomes part of the policyholder’s estate, it would then be distributed as per their will (or rules of intestacy if there is no will).

Yes, it is recommended to tell your trustees that they have been appointed and what their role involves. It is also useful to tell them where the policy and trust documents are.

At Tesco Insurance, we want to help you with the things that matter most. That’s why Tesco Life Insurance comes with a Big Win and lots of Little Helps.

As well as your Tesco benefits, you’ll also get Aviva DigiCare+ - a health and wellbeing service from Aviva that includes unlimited Digital GP consultations and the Bupa Anytime HealthLine.

Tesco Life Insurance is provided and administered by Aviva, who have a 5-star Defaqto rating for life insurance and pay out on 98.7% of claims*.