Nomination of Beneficiaries Framework
It has been gazetted that the Insurance (Amendment) Act & Insurance (Nomination of Beneficiaries) Regulations on the new nomination of beneficiaries framework commenced on 1 Sept 2009.
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. Besides by nomination, another option was distribution of insurance proceeds from one’s estate via will instruction other than distribution in accordance with the Intestate Succession Act by default.
For information purpose, the 2 tables below illustrate the key changes regarding Revocable and Trust Nominations as provided by NTUC Income.
TABLE 1: COMPARISON OF KEY CHANGES FOR REVOCABLE NOMINATIONS
Practice under Co-operative Societies Act (CSA) prior to 1 Sep 2009 | New Nomination of Beneficiaries (NOB) under Insurance Act (IA) from 1 Sep 2009 |
Revocable Nomination governed under s45 of CSA | Revocable Nomination under s 49M(2) of IA |
Use of NTUC Income’s prescribed form to nominate | Use of Form 4 of Insurance (NOB) Regulations to nominate |
1 nomination form for 1 or more policies | 1 nomination form per policy |
Muslims can nominate anyone but are usually advised to nominate in accordance with the school of Muslim law professed by him | According 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 payout | Nomination 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 Will | Nomination 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 |
TABLE 2: COMPARISON OF KEY CHANGES FOR TRUST NOMINATIONS
Practice under s73 CLPA prior to 1 Sep 2009 | New Nomination of Beneficiaries (NOB) under Insurance Act (IA) from 1 Sep 2009 |
Trust created under s73 CLPA | Trust (Irrevocable) Nomination under s49L(2) of IA |
Use of NTUC Income’s prescribed form to nominate | Use of Form 1 of Insurance (NOB) Regulations to nominate |
1 nomination form for 1 or more policies | 1 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 trustee | Trustee appointed using Form 1 but no default trustee. Policy owner must appoint at least 1 trustee |
Consent of Trustee not required before appointment | Consent of Trustee is required before appointment |
Trustee must be 21 years old | Trustee 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 |
With effect from 1 Sep 2009:
(a) the law governing the nomination of beneficiaries is consolidated under the Insurance Act; and
(b) 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.
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