"Beneficiary nomination can provide a straightforward solution for many clients."
- Craig Paterson - Royal London
Royal London has announced that it is updating its protection application journey by making beneficiary nomination the default option for eligible customers.
The change, which went live this month, means beneficiary nomination is automatically selected within eligible protection applications, while advisers can still choose a trust if that better suits the client's needs.
Beneficiary nomination allows customers to specify who should receive the proceeds of their protection policy in the event of their death.
Royal London says that by avoiding probate delays, families can access financial support sooner when they need it most, and that making beneficiary nomination the starting point for eligible applications helps ensure customers' wishes are clearly recorded and acted upon.
Without beneficiary nomination or a trust, policy proceeds may become part of an estate, potentially delaying payment while probate is completed.
The FCA's final Pure Protection Market Study highlighted a 'beneficiary gap', noting that policies without trusts or beneficiary nominations can lead to delays and uncertainty at claim stage.
Alongside the change, new adviser guidance helps advisers identify when beneficiary nomination may be suitable and when a trust may be more appropriate.
Customers can update their nominated beneficiaries at any time and receive regular reminders to review their choices.
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"When someone dies, their family may be dealing with very difficult circumstances, sometimes suddenly, so the process around receiving the proceeds of a protection policy should be as clear and straightforward as possible," Craig Paterson, chief underwriter at Royal London, said.
"Beneficiary nomination helps make sure customers’ wishes are recorded in advance, so families can access support more quickly when it matters most.
"Good protection advice is about more than selecting the right level of cover. It's also about helping clients think through what happens when a claim is paid and ensuring their wishes are clearly recorded.
"Beneficiary nomination can provide a straightforward solution for many clients, while trusts continue to play an important role where greater control or more complex planning is required.
"The most important thing is that these conversations happen and that advisers are equipped to help clients choose the option that best reflects their circumstances."
Ruth Gilbert, partner at Insuring Change, said: "This is another important step towards closing the beneficiary gap. It gets to the heart of what life cover is meant for. A financial safety net for a loved one should be the one service that is the best for them to deal with in bereavement, since it was bought for that very moment.
"Getting cover in place without direction of the payout for the intended person to receive it, and to do so without delay, leaves the job half done. Royal London is to be applauded for making it easier to protect potential claimants’ interests properly right from the start."
