Let me help those who are still confused with the new Insurance Nomination Law. I am quite sure some of you would have chuck this information aside because it is a bit too heavy to digest.
The thing is, do you have to do anything?
- If YES, what do you have to do?
- If NO, what would happen?
- Making a nomination is NOT compulsory, but the new regime provides a simple avenue to ensure that your policy proceeds are paid out to the right person at the right time, and in the right amount. This is much cheaper than writing a will.
- In the absense of a valid nomination, the insurer may pay up to the first $150,000 of proceeds from a policy to a proper claimant. The balance will form part of the deceased's estate and will be distributed according to the interstate law or a will. This process will be quite lenghty.
2. Options for existing policyholder (bought before Sept 1 2009)
i) Had never made any nominations: You can now make a revocable or trust nomination under the new law.
ii) Had named your spouse or children as beneficiaries: You have created a statutory trust under Section 73 and your nominees will continue to be recognised. If you wish to make changes, it is possible.
iii) Had named people other than your spouse or children as beneficiaries: All these will not be legally binding. The new law will allow you to make fresh nominations in your plan
iv) Had named your spouse or children AND other people or relatives as beneficiaries: The ability to make new nominations under the new law will depend on the status of these nominations & the terms of the policy. You may have to seek legal advice.
3. Revocable vs. Trust Nominations
- Explaination as below:
If you wish to do a nomination, do approach me so that I can help you get the appropriate nomination forms from the respective insurance companies. At the same time, you may also wish to do a portfolio review of your existing insurance and investment policies to ensure your objectives are still in line when you bought these policies.
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