Readers have told this columnist of the runaround they received and the conflicting advice given on what is required before insurers pay benefits.

One widow was told by a large insurer that, even though her deceased husband named her as the beneficiary, she had to get probate first because there were two small policies that totalled more than $50,000. She had previously been told by a solicitor that she only needed his death certificate and his will. The life insurance payout was delayed by eight months while she got probate at a cost of $3000.

According to Roy Agranat, a risk adviser at Centric Wealth, whether or not a life insurance policy payout can bypass the sometimes lengthy process of probate depends on whether a beneficiary is specifically nominated on the policy. In most cases the nomination would be the spouse or partner who may anyway have been the beneficiary of the estate. The estate is sometimes nominated if the insured wishes to have a Testamentary Discretionary Trust which would, on death, allow for income to be distributed tax effectively to the beneficiaries.

If the estate is the preferred beneficiary, it could be sensible to nominate the spouse or partner as beneficiary on a portion of the life cover which could then be paid out before probate is granted. This would provide funds to the family while waiting for probate.

In most cases, and particularly in the case of older style life insurance policies, beneficiaries are not nominated and the benefit is automatically paid into the deceased's estate. Once it is in there, probate is a requirement before any money is released under the policy.

Probate is the process of proving and registering in the court the last will of a deceased and confirms the author of the will has died. This process costs $3000 and upwards. However, many surviving spouses who don't have complicated financial situations and only a will and a death certificate think they can bypass it.

Other than nomination, another way to bypass probate with insurance is for the spouses to own policies on each other. As Agranat points out, this can cause problems when marital breakdown occurs and the parties won't return the policies to the insured. This may be an issue especially if one of them is uninsurable at the time and they need to have insurance cover in place.

But, he says, allowing the death benefit to be paid into an estate also leaves the benefit, along with other estate assets, accessible to creditors. Creditors have a much harder time trying to get their hands on the death benefit if it is paid directly to the policy owner's spouse or partner.

Chrissy Deveney from Asteron's technical service team says if the husband owns the policy and fails to nominate his wife as the beneficiary, probate would be required before the benefit is paid. The same principle applies if the wife dies and owns her policy.

If the policy is for less than $50,000 the probate requirement may be waived and a certified copy of the death certificate and a statutory declaration may be sufficient to allow the benefit to be paid out.

In the same vein, what happens with joint bank accounts? A Commonwealth Bank spokesman says, provided the amount is less than $50,000, the surviving spouse or partner can operate the account. If it is more than $50,000, probate is required (although this can be waived in hardship cases).

It underlines the importance of making suitable arrangements beforehand so that family members are not disadvantaged at the worst possible time.