Dealing with life and all its complexities just got easier for life insurance policyholders. With the new Insurance Nomination Law in effect from 1 September 2009, policyholders now have more flexibility and control in naming their beneficiaries and a choice of control over the policy. For policies purchased from 1 September 2009, you now have a choice to make a trust nomination or a revocable nomination, as best suits your purposes.

Trust Nomination

When making a trust nomination, it means that you will give away rights and benefits of the policy to your nominee. Even as you upkeep the policy premiums, all proceeds from the policy will now belong to the nominees that you have named. You will also need written consent from all nominees should you wish to make changes or surrender the policy. You may only nominate your spouse and/or children. On the plus side, policy proceeds in a trust nomination are generally protected from creditors in the event of any bankruptcy.

Revocable Nomination

When making a revocable nomination, it means that you will continue to retail full rights and ownership over the policy. You will be able to make changes, or revoke a nomination at any time without consent from nominees. This flexibility will be beneficial as you may wish to change your nomination, owing to reasons such as a divorce or the birth of a new child.

A quick look at nomination options

Making the right choices about nomination

Making a nomination is not compulsory under law. However, it is an affordable legal means of distributing policy benefits to your nominees, ensuring that money from your policy is paid to the person(s) that you wish to benefit, at the right time and in the right amount. Without a valid nomination, the insurer may pay up to the first $150,000 of proceeds from a policy to a proper claimant, with the balance forming part of your estate to be distributed according to law or a valid will.

When considering making a trust or revocable nomination, it is important to consider the type of policy that you hold and how it affects you as the policyholder. 

Practical Steps

As the new Nomination Law does not apply retrospectively to policies bought before 1 September 2009, it is recommended that you seek your insurer’s advice on the status of your existing policies before making fresh nominations. For example, if you own policies bought before 1 September 2009 and have never made any nominations, you can now choose to make a revocable or trust nomination under the new law.

When making a nomination:

• Check with your insurers regarding your policy status
• Decide who you want to name as your nominee
• Decide on the type of nomination you would like to make
• Use the relevant form and specify the portion of benefits you want each nominee to receive
• Ensure all nominee details are accurate
• Ensure that witnesses present meet the requirements as specified in the nomination form
• Notify your insurer that you have made a nomination and send a copy of the form to them.

Copies of Nomination Forms can be obtained from your insurance company.