Do you have life insurance? Probably yes. But what if the person who will receive your insurance payouts is not the one you intend to? Have you made your insurance nomination of beneficiaries?

insurance-claim-approved

You may not even know that you can make insurance nomination in your policy. But things are different now. Your insurance policies are governed by new laws and here are the changes.

For many years, (to be precise, before 1 Sep 2009), there was no provision in the Insurance Act to govern the nomination of beneficiaries for the insurance proceeds of life policies.

Instead, nomination of beneficiaries was governed by

  • Section 73 of the Conveyancing and Law of Property Act (CLPA), and
  • Section 45 of the Co-operative Societies Act (CSA) for NTUC Income life policyholders.

As the names may suggest, the laws did not seem too relevant.

With effect from 1 Sep 2009, things have changed.

  1. The law governing the nomination of beneficiaries is consolidated under the Insurance Act; and
  2. No nomination is allowed under the CLPA and the CSA.

For policyholders that had made nomination prior to 1 Sept 2009 under s73 of CLPA or s45 of CSA, there will be no change and no action is required.

What are the key changes for revocable nominations

Practice under Co-operative Societies Act (CSA) prior to 1 Sep 2009New Nomination of Beneficiaries (NOB) under Insurance Act (IA) from 1 Sep 2009
Revocable Nomination governed under s45 of CSARevocable Nomination under s 49M(2) of IA
Use of NTUC Income’s prescribed form to nominateUse of Form 4 of Insurance (NOB) Regulations to nominate
1 nomination form for 1 or more policies1 nomination form per policy
Muslims can nominate anyone but are usually advised to nominate in accordance with the school of Muslim law professed by himAccording to operational practice as agreed by Life Insurance Association (LIA) and all insurers, Muslims will only be able to make Irrevocable Nominations
Nomination form allows for appointment of Trustee to receive the death proceeds under the policy on behalf of any nominee below 21 years old at time of payoutNomination form does not allow for appointment of Trustee. If nominee is below 18 years old, parent/guardian can receive insurance proceeds on behalf of such nominee.
Nomination not overridden by WillNomination may be overridden by Will if Will is the latest valdly executed instrument (made known to insurer) in accordance with Insurance (NOB) Regulations
Nomination revoked by:- another nomination

– use of Income’s revocation form

– creation of a s73 CLPA trust

– an Assignment/Notice of assignment, encumbrance

Nomination revoked by:- another revocable nomination (Form 4)

– express revocation (From 5)

– Irrevocable/Trust Nomination (Form 1)

– Notice of assignment, encumbrance, or will with prescribed particulars using Form 6

What are the key changes for trust nominations

Practice under s73 CLPA prior to 1 Sep 2009New Nomination of Beneficiaries (NOB) under Insurance Act (IA) from 1 Sep 2009
Trust created  under s73 CLPATrust (Irrevocable) Nomination under s49L(2) of IA
Use of NTUC Income’s prescribed form to nominateUse of Form 1 of Insurance (NOB) Regulations to nominate
1 nomination form for 1 or more policies1 nomination form per policy
Spouse and children (excluding illegitimate children)Spouse and children (including illegitimate children)
Trustee appointed using NTUC Income’s prescribed form or policy owner is default trusteeTrustee appointed using Form 1 but no default trustee. Policy owner must appoint at least 1 trustee
Consent of Trustee not required before appointmentConsent of Trustee is required before appointment
Trustee must be 21 years oldTrustee must be 18 years old
Discharge for receipt of policy money is given by Trustee(s)Discharge for receipt of policy money by any Trustee who is not the policy owner, OR all nominees who are 18 years old and parent/legal guardian’s (who is not the policy owner) consent for nominees below 18 years old.
Revocation of trust – consent to be obtained from Trustee(s) and beneficiaries. Where beneficiaries are below 21 years old, only trustee’s consent is required. Use of NTUC Income’s prescribed form to revoke.Revocation of trust – consent to be obtained from Trustee who is not the policy owner OR all nominees who are 18 years old and parent/legal guardian’s (who is not the policy owner) consent for nominees below 18 years old. Use of Form 2 of Insurance (NOB) Regulations to revoke

If this sounds too complicated and confusion (I know they do). Simple ask your questions below and I will answer all of them.

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

  • Hi, i have already done my Will years ago. Can i still make a revocable nomination to facilitate the payout of the insurance money under Proper Claimant without going through Probate? Any complications?

    • Hi, Mui

      It depends on how your will was written. If your will has provision to take care of insurance under nomination, it is not a problem. Otherwise, it may create conflicting instruction.

  • I have an insurance plan which I have applied under Section 49L few years ago & recently I have made a Will.

    Will this insurance plan under 49L supersedes by my recent Will?

    Pls advise.

    Tks

    • Hi, Joyce

      When you made a Section 49L trust nomination, you lost all rights to the ownership of the policy. This means that all proceeds (living benefits and death benefits) from the policy now belong to the beneficiaries you named.

      Therefore, the policy is no longer your asset, and it will not be distributed by your will.

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