Contingent Beneficiary: What Australians Need to Know in 2025

When was the last time you checked who gets your super or life insurance payout if your primary choice can’t? For too many Australians, the answer is ‘never’. But in 2025, with new estate planning trends and super reforms, understanding your contingent beneficiary is more important than ever.

What is a Contingent Beneficiary?

A contingent beneficiary is the person (or people) who receives your asset—like superannuation, insurance, or a trust—if your primary (or ‘primary beneficiary’) can’t. This could be because they’ve passed away, can’t be found, or refuse the inheritance. It’s a crucial backup plan that ensures your assets go to the right people, no matter what happens.

• Primary beneficiary: Your first choice for who inherits your asset.

• Contingent beneficiary: The backup, who steps in if the primary beneficiary can’t inherit.

In 2025, more Australians are naming contingent beneficiaries as part of a proactive estate plan—especially as blended families, de facto relationships, and complex family structures become the norm.

Why Contingent Beneficiaries Matter in 2025

Australia’s financial landscape is shifting. The ATO’s superannuation death benefit rules have tightened, and some insurers now require explicit contingent beneficiary nominations. If your will, super, or insurance policy doesn’t specify a backup, your assets may be distributed by default under intestacy laws—which may not reflect your wishes.

Consider these scenarios:

• Superannuation: If your nominated beneficiary dies before you, and you haven’t named a contingent, your super could go to your estate, triggering tax and delays.

• Life insurance: Without a backup, the payout may get stuck in probate or be paid to someone you never intended.

• Family trusts: With complex rules around distributions, a contingent beneficiary ensures your trust’s assets stay in the right hands—even if circumstances change.

In 2025, the Family Law Amendment (Superannuation) Bill and the Treasury’s review of non-lapsing nominations highlight the growing focus on beneficiary clarity. Reviewing your nominations now can save your loved ones stress and legal headaches later.

How to Set Up and Review Your Contingent Beneficiaries

Setting up a contingent beneficiary is straightforward, but it’s easy to overlook. Here’s how to get it right:

• Superannuation: Log in to your fund portal or request a beneficiary nomination form. Many funds now offer ‘binding nominations’ with a contingent option—make sure it’s up to date and valid for 2025 rules.

• Life insurance: Check your policy documents or contact your insurer. Some now ask for contingent nominations as standard due to recent claims disputes.

• Wills and trusts: Work with your solicitor to add contingent beneficiaries to your estate plan, especially if you have a blended family or dependent children.

When choosing your contingent beneficiaries, consider:

• Relationship changes (marriage, divorce, new children)

• Tax implications—some beneficiaries (like adult children) may trigger higher taxes on super payouts

• Clarity—be specific with names and details to avoid disputes

Tip: Review your nominations annually or after any major life event.

Real-World Example: Avoiding a Costly Mistake

Meet Lisa, a Melbourne mum who set up a life insurance policy in 2018. She named her husband as the primary beneficiary but didn’t add a contingent. When her husband tragically passed away before her, Lisa’s estate faced a lengthy legal battle—her children were under 18, and the insurance payout was delayed for months. Had Lisa nominated a contingent beneficiary (such as a family trust for her kids), the process would have been smoother and far less stressful.

This scenario is becoming more common as Australians live longer and families grow more complex. Don’t let your legacy be left to chance.