Aviva Life Insurance: Adding A Beneficiary Simplified

Life insurance is a financial safety net for your loved ones after you pass away. It is a lump-sum payout that can help pay off mortgages, cover monthly bills, or maintain the standard of living for those who depend on you financially. When taking out life insurance, it is essential to name a beneficiary or beneficiaries to ensure the payout goes to the right people. Aviva offers different types of life insurance plans, including single and joint life insurance policies, and allows you to place your policy in a trust, giving you more control over who receives the money. This article will guide you through the process of adding a beneficiary to your Aviva life insurance policy and provide valuable insights into the world of life insurance.

Adding a beneficiary to your Aviva pension

Your pension is part of your assets, just like your savings or your possessions. This means that the money in your pension pot could go to your loved ones in one big lump sum. Adding a beneficiary to your pension ensures that your money goes to the right person or people.

Who can be a beneficiary?

Anyone can be a beneficiary. Most people choose their partner or children, but beneficiaries can also include friends, other relatives, or even organisations such as charities. You can also decide how much each beneficiary will receive. For example, you might want to give 40% to your partner, 25% to each of your children, and the remaining 10% to a charity.

How to add a beneficiary

Benefits of adding a beneficiary

Adding a beneficiary to your pension can provide peace of mind for you and your loved ones. It ensures that your wishes are carried out and that your money goes to the people you want to have it. It also makes the process simpler and quicker for your beneficiary to receive the payout.

Trusts

If you want more control over who receives the money from your pension, you can place your pension into a trust. A trust is a legal arrangement that allows you to specify who benefits from the payout and who manages the process. Aviva offers two types of trusts: the Aviva Discretionary Gift Trust and the Aviva Survivor Trust. By placing your pension in a trust, the payout will not be counted as part of your taxable estate, and any money passed on to your beneficiaries will usually be exempt from inheritance tax.

Seeking advice

Adding a beneficiary to your pension is an important decision, and it is recommended to seek independent legal and financial advice before making any changes to your pension.

Adding a beneficiary to a joint life insurance policy

The Aviva Discretionary Gift Trust is a flexible option that allows you to nominate multiple beneficiaries, including children or grandchildren. You can also add beneficiaries at a later date, such as in the case of the birth of a child. To add a beneficiary, simply notify the trustees in writing, specifying who you want to add and how you want the money to be divided among the beneficiaries.

On the other hand, the Aviva Survivor Trust is suitable for joint life insurance policies where one partner will receive the payout if the other passes away. By placing your policy in this trust, the trustees can pay the surviving partner directly if they are still alive 31 days after the death of their partner. If the surviving partner also passes away within 31 days, the trustees can pay the money directly to the trust beneficiaries, usually without incurring inheritance tax.

In general, placing your joint life insurance policy into a trust gives you more control over who benefits from the payout and ensures that the money is not subject to inheritance tax. It also allows you to specify who will manage the process and the funds after your passing. To set up a trust, you will need to fill out an application form and seek independent legal and financial advice beforehand.

It's worth noting that you can also specify a beneficiary without setting up a trust. However, this may not be as tax-efficient, and it's important to make your wishes known to your insurer. Additionally, keep in mind that your beneficiary must be at least 18 years old to receive a payout.

Adding a beneficiary to a single life insurance policy

If you have a single life insurance policy, the money will be paid into your estate when you pass away. This means that it's important to make your wishes known. If you want to choose a beneficiary (the person who will benefit from the lump-sum payout), you could consider placing your policy into a trust.

Types of trust

Aviva offers two types of trust: the Aviva Discretionary Gift Trust (for single or joint life insurance policies) and the Aviva Survivor Trust (for joint life insurance policies).

The Aviva Discretionary Gift Trust is a flexible trust that lets you nominate multiple beneficiaries, including children or grandchildren. You can add beneficiaries over time, for example, if you have more children after setting up the trust. To add a beneficiary, simply notify the trustees in writing, specifying who you want to add and how you want the money to be divided.

The Aviva Survivor Trust is for joint life insurance policies. If you have a joint life insurance policy and one partner dies, the money will go to the surviving partner as long as they are still alive 31 days after the death of their partner. If the surviving partner dies within 31 days, the money goes directly to the beneficiaries, usually without incurring inheritance tax.

Benefits of placing your policy in a trust

• Any money passed on to your beneficiaries is usually exempt from inheritance tax.
• Money can often be paid to beneficiaries more quickly.
• You can specify who benefits from any payout.
• You can have extra control over your life insurance.

Things to keep in mind

• A trust is a legal arrangement with tax and legal implications. Once it's been set up, you can't simply cancel it.
• Your trustees will have a duty to your beneficiaries and will be personally liable for any loss to them (e.g., if they don't pass on any payment from your life cover).
• It's a good idea to seek independent legal and financial advice before setting up a trust.

Adding a beneficiary to a trust

If you have a single life insurance policy and want to choose a beneficiary, you can consider placing it into a trust. This way, you can specify who will receive the money from the payout. A trust is a way of managing money that allows a trustee or trustees to hold assets on behalf of the beneficiary or beneficiaries.

There are three main types of trusts:

• Absolute trust: This provides certainty as to who will benefit, but the policyholder doesn't have full control as beneficiaries can't be changed.
• Discretionary trust: This allows for a wider pool of potential beneficiaries, and you can write an 'expression of wishes' to guide trustees. If you wish to change your beneficiary over time, you'll need to write another expression of wishes and lodge it with the trustees.
• Flexible trust: This is similar to a discretionary trust, but you can name 'default' beneficiaries who may receive a payout if there is no appointment in favour of one or more potential beneficiaries during the trust period.

When you set up a trust, you become the settlor, and you can specify who you want any money to go to (the beneficiary) and who would look after it if you die (the trustee). It is recommended to appoint at least one other trustee to manage the trust when you pass away. The trustees become legally responsible for the trust and must manage it according to the settlor's wishes.

To add a beneficiary to a trust, simply inform the trustees in writing of who you want to add and how you want the money to be divided. You can also add beneficiaries over time, such as in the case of children or grandchildren being born after the trust is set up.

It is important to note that setting up a trust has tax and legal implications, and once it's been set up, you can't simply cancel it. It is recommended to seek independent legal and financial advice before setting up a trust.

Adding a beneficiary to a critical illness cover policy

• Understand the Role of a Beneficiary: A beneficiary is the person or group of people you nominate to receive a lump-sum payout from your critical illness cover policy. This ensures that the payout goes to the people you intend to protect.
• Decide on the Type of Beneficiary: You can choose between two main types of beneficiaries. The first option is to name a specific person or people, such as your partner, children, friends, or other relatives. The second option is to designate an organisation, such as a charity, as the beneficiary. You can also specify the percentage of the payout that each beneficiary will receive.
• Consider Placing the Policy in a Trust: Aviva offers the option to place your life insurance policy in a trust. This gives you more control over the payout and can provide tax benefits. There are different types of trusts available, including absolute trusts, discretionary trusts, and flexible trusts, each with its own advantages and level of flexibility.
• Fill Out the Necessary Forms: To add a beneficiary, you will need to fill out the appropriate forms provided by Aviva. This may include specifying the type of trust you want to set up and nominating people for different roles, such as settlor, trustees, and beneficiaries.
• Seek Independent Advice: Before finalising your decision, consider seeking independent legal and financial advice. Setting up a trust has tax and legal implications, and it cannot be easily cancelled once established. It's important to understand these implications to ensure your wishes are carried out as intended.
• Submit the Forms: Once you have completed the necessary forms and sought any required advice, submit the forms to Aviva using the provided email address ([email protected]) or postal address. Make sure to include all pages of the form, even the ones you haven't written on.
• Review and Update: It's important to periodically review your critical illness cover policy and beneficiary information. Life circumstances can change, and you may want to adjust your beneficiary or policy details accordingly.

Remember, adding a beneficiary to your critical illness cover policy ensures that your chosen beneficiaries receive the financial support you intend in the event of a claim. Taking the time to set up and review your policy provides peace of mind and helps protect your loved ones.

Frequently asked questions