Assure Your Loved Ones with a Well-made Insurance Nomination

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Who will Your Insurance Benefits Go to? Here’s what you need to know about Insurance Nomination. Jonathan Chua of Ignite Wealth Group explains why appointing nominees for your insurance policies is important and shares tips on how to get it right

Insurance nomination applies to life, accident and health policies with death benefits which are governed by Singapore law and issued by licensed insurance companies registered in Singapore . The policyholder appoints a person or persons i.e. the nominee(s) to receive policy benefits in case of a death claim. This is called insurance nomination, and in case of an eventuality, the insurance company will know exactly who to pay the policy proceeds to.

Making a nomination is not compulsory, but it makes the insurance payout quicker and fuss-free. On top of that, your loved ones are well-assured when you let them know you have them properly covered in your insurance nomination? The important question is: what happens if there is no insurance nomination? A death claim will be paid to the “Proper Claimant” as defined by the Insurance Act, where the insurance company may pay up to SGD150,000 to the “proper claimant” according to the law but this may not be the intended beneficiary. The remaining balance above SGD150,000 will be paid to the administrator(s) under Grant of Letters of Administration (if no will has been made) or executor(s) under Grant of Probate (will has been made). This means the proceeds will be distributed according to your will, provided you have one. If not, the proceeds will follow the rules under the Intestate Succession Act. It may take some time for these legalities to be sorted out depending on the individual circumstances, delaying the payout.

Therefore, I strongly recommend you to make your nomination with urgency. Some people prefer to make a nomination upon application while others do it after the policy is incepted. The choice is yours – just remember to get it done properly to avoid potential unpleasantness down the road. Some worst-case scenarios have happened when no proper nomination was made. For instance, the payout ended up in the wrong hands (e.g. ex-spouse); or family disputes have erupted over who should be the rightful claimant. Try to make the nomination wisely to avoid problems in future. 3 reasons to make an insurance nomination:
  • Give policyholder absolute control over how insurance proceeds are distributed
  • Avoid potential conflicts between loved ones that may arise over the distribution
  • Nominees get to receive payout promptly, when they need it most

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