If you do not nominate a beneficiary to receive the proceeds of your life insurance then it will be distributed in accordance with the terms of your Will
You may not be aware of this but the proceeds of your life insurance policy will not be distributed in accordance with the terms of your Will if you have nominated a beneficiary of the life insurance policy.
When you take out a Life Insurance Policy you can usually nominate who you wish to receive the proceeds of the policy upon your death… that person or persons are known as the beneficiary.
If you don’t nominate a beneficiary, then the proceeds of the Life Insurance Policy will be paid into your estate and will then be distributed in accordance with the terms of your Will.
There is nothing wrong with that. In fact it is a smart way of minimising the assets in your estate and thus reducing the legal costs payable to obtain probate of your estate. However, just make sure the beneficiary is who you want it to be. In that regard, your circumstances may change over time… for example, you may divorce the person nominated as the beneficiary or the nominated beneficiary may die before you.
This is referring to Life Insurance taken out as a separate policy to any Life Insurance that may be included with your superannuation. Different rules apply to life insurance attached to a superannuation policy.