Revocable Nomination Option Available in Singapore
With effect from 1 September 2009, the Singaporean Parliament amended the Insurance Act to provide a new framework for nominations of beneficiaries under an insurance policy. This mouthful of a sentence is an important piece of legislation for life policy holder as it will solve two serious problems.
- Previously, when a policyholder denominated a spouse and/or childern as beneficiaries, a trust was automatically created in their favour. As a trust can only be amended with the approval of all the existing beneficiaries, this created difficult situations. Ex: a divorcee could not change the beneficiaries to his new wife without the consent of his ex-wife. Worse, the loss of benefits includes payout made for claims such as critical illness of total permanent disability.
- The nominations were restricted to spouse and children.
The new system now offer you a choice between a trust nomination, and a revocable nomination. With the latter, you retain all of your living benefits, you can amend or revoke nominees as you see fit, and you can nominate non family members. The only drawback is that your benefits are not protected against bankruptcy as they are with a trust.
A good piece of legislation.
If you have a life policy but did not nominate beneficiaries, you should do so ASAP. Your family / beneficiaries will be able to receive the payout from the insurance faster and easier.