"On average for those claims where the policy was not in Payout Planner or a trust, we’ve had to wait 7 months between asking the claimant for the grant of probate and receiving it."
- Phil Deacon, Head of Claims at Guardian
Guardian Financial Services (Guardian) launched Payout Planner in 2018, allowing policyholders to nominate up to nine beneficiaries when applying for Life Insurance. Since it forms part of the application form, Payout Planner provides ongoing flexibility as beneficiaries can be changed at any point.
Since the launch, 68% of its Life Insurance policies have used beneficiary nomination, accounting for 74% of the claims paid in 2023. This is four times the number of new term policies written in trust during 2022, according to Swiss Re's ‘Life Claims: A Beneficial Direction’ Report. Written in conjunction with Insuring Change, this report found that the ‘beneficiary gap’ exists of roughly four in five single own life policies.
Beneficiary nomination plays a vital role in directing claims to the right recipients, especially when the intended beneficiary is an unmarried partner. It does this by giving legal entitlement of the death benefit proceeds to the beneficiary and keeping the payment out of probate. In the absence of a named beneficiary, the benefit proceeds will go through probate as an unmarried partner has no legal entitlement to receive the payout.
With the Office for National Statistics’ (ONS) data for 2020-21 showing an upward trend in the number of unmarried cohabitees, beneficial direction has the potential to be an increasing problem under Consumer Duty. According to the UK Parliament Justice Committee’s November 2023 inquiry, probate can take up to eleven months, with the average time from application to grant of probate in the first quarter of 2023 recorded as five times longer than in 2018. These delays can leave families without crucial financial aid.
Phil Deacon, Head of Claims at Guardian, said “with five years of claims behind us, we’ve many examples that show our beneficiary nomination tool, Payout Planner, plays an important role in improving outcomes.” He’s experienced first-hand how it has helped pay money to the right person in claims where the couple weren’t married and no will was in place.
“It’s really encouraging to see a high rate of take-up within Guardian of its beneficiary nomination. Because it forms part of the application process, it’s easier to put in place than a trust, and it really makes sense as the default option when available to ensure money gets to the right people,” explained Ruth Gilbert, Lead Partner at Insuring Change.
“We hope to see more providers put this in place to catch the many Life Insurance claim payouts that would otherwise be directed to probate,” she concluded.
