Changes to Insurance Nomination Act and How it Affects You
The Insurance Nomination Law recently came into effect on 1st September 2009.
Before this law, there were a couple of problems with nomination of beneficiaries for your insurance policies, namely:
(this applies to all policies bought except those from NTUC Income which falls under a separate Act)
1) Nomination of spouse and children created an irrevocable trust. This means that policyholder no longer has beneficial ownership of the policy and cannot change nominees or cash out the proceeds without the consent of all the nominees.
2) Nomination of other people like parents, siblings, etc had no legal effect.
Under the new law (which does not apply retrospectively), those who take up insurance policies will have the option of creating either a revocable or trust (irrevocable) nomination.
With a revocable nomination, a policyowner is free to change, add or remove nominees without their consent.
If you have an existing insurance policy with no nomination in place, you can also make use of the new law to make either a revocable or trust nomination if you wish to do so.
In the absence of a valid nomination, the insurance company may pay up to the first $150k of proceeds from an insurance policy to a proper claimant. The balance will form part of the deceased estate and distributed according to the intestate law or a will.
For insurance plans that are renewable yearly (eg personal accident plans), the nomination will have to be done on an annual basis.
More details can be found in the document which can be downloaded from the link below:
LIA Insurance Nomination (5 MB)