Framework for Nomination of Beneficiaries

The Insurance (Amendment) Act 2009, which incorporates a framework for nomination of beneficiaries in respect of insurance policy proceeds, was passed by Parliament on 19 January 2009 and came into effect on 1 September 2009. The framework aims to give policy owners a clear, simple and economical means to decide how the proceeds from their insurance policies should be distributed.

Under the nomination framework, policy owners have a choice of whether or not to make nominations. If they choose to nominate, they then have the option of making either a revocable or an irrevocable (trust) nomination.

With a revocable nomination, the policy owner will be able to unilaterally change his nomination at any time. Any legal entity may be nominated as the beneficiary. The policy proceeds under such a nomination will be paid to the policy owner while he is still alive and to his beneficiaries thereafter.

An irrevocable (trust) nomination will create a statutory trust in favour of the beneficiaries. This means the policy owner will lose all rights and control over the policy concerned. In exchange, the policy proceeds will be protected from his creditors. Only the policy owner’s spouse and/or children can be nominated as the beneficiaries of a trust nomination. All policy proceeds under such a nomination will be paid to the beneficiaries.

The nomination framework applies to all life, as well as accident and health insurance policies with death benefits. However, it does not apply retrospectively, meaning that policies with existing nominations will continue to be subjected to the legislation in-force at the time the nomination was made.

Policies nominations made before The Insurance (Amendment) Act 2009
a. When a policy owner names his spouse and/or children as beneficiaries of an insurance policy effected on his own life, Section 73 of CLPA will automatically create a statutory trust in favour of the beneficiaries, even though the policy owner may not have intended to create a trust.
b. Once a trust is created, the policy owner will lose all rights and control over the insurance policy.
c. Only NTUC Income under the Cooperative Societies Act(CSA) is able to freely nominate their desired beneficiaries.

Nomination of Insurance Nominees_(PDF) English

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