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With effect from 1 September 2009, all insurance companies will follow the new insurance nomination framework, including insurance cooperative giant, NTUC Income.

NTUC Income, being a cooperative, had its own Section 45 of the Co-operative Societies Act (CSA) to govern the revocable nomination of beneficiaries before 1 September 2009. In the past, the commercial insurance industry has two problems for nominating beneficiaries for their insurance policies bought.

Firstly, when the policyholder has nominated the spouse and/or children as the beneficiaries, Section 73 of the Conveyancing and Law of Property Act (“CLPA”) and Law of Property Act (“CLPA”) will automatically create a statutory trust in favour of the beneficiaries.

The implication is that he will not be able to change nomination subsequently except with the approval of all the existing beneficiaries. Hence, a divorcee cannot change the beneficiaries to his new wife and children without the consent of his ex-wife and/or children from the previous marriage. The creation of such a trust also implies that the policy owner will irrevocably lose all rights and control over the insurance policy concerned, including payouts made when he claims on critical illness or total permanent disability.

Secondly, if the policy owner nominates someone other than his spouse and/or children, no nomination will be recognised under section 73 of the CLPA.  Since there is presently no provision for nomination of other types of beneficiaries in the Insurance Act, the status of such nominations is uncertain.

So in order to overcome the above 2 situations, the new Insurance (Amendment) Act & Insurance (Nomination of Beneficiaries) Regulations now allow the policy owner to make two kinds of nomination:

• Revocable Nomination (similar to NTUC Income CSA)
• Trust Nomination (similar to Section 73 of CLPA)

Revocable Nomination

To make a revocable nomination, obtain the official prescribed form from the insurance company. Complete the form in the presence of two adult witnesses who must be at least 21 years old and who are not your nominee(s) or your nominees' spouses. The nominee can be any individual or any legal entity such as an association or corporation. You must send your original completed Revocable Nomination Form to the insurance company for it to take effect.

You are allowed to make numerous Revocable Nominations for the same policy, with the latest nomination revoking and replacing the previous nomination.

For nominees below 18 years, the death proceeds will be paid to the parent or legal guardian. And the proceeds of the policy are not protected from your creditors.

Trust Nomination 

If you make Trust Nomination, you will be facing the problems as described above. However, the insurance policy under trust nomination will be protected from your debtors upon bankruptcy as you have given up all rights under the Trust Nomination.
Like the Revocable Nomination, obtain the official prescribed form from the insurance company. Complete the form in the presence of two adult witnesses who must be at least 21 years old and who are not your nominee(s) or your nominees' spouses. The nominee can be only your spouse and/or children. You will need to name a trustee who is at least 18 years old. A nominee can also be a trustee. The trustee can be changed at any time, subject to prevailing law. You can name yourself as the trustee but if you do so you will not be able to

• Receive the policy proceeds or
• Give consent for revocation of the nomination on behalf of the nominees.

You must send your original completed Trust Nomination Form to the insurance company for it to take effect.

Take note that you need to get the written consent of all nominees or of a trustee other than you before you can:

• Revoke the trust nomination
• Make any changes to the policy
• Take a loan under the policy
• Surrender the policy

When a nominee dies before you, the deceased nominee’s share of the policy proceeds will go to his estate, unless you revoke the nomination.
 

So hurry, approach your insurance company and start making your nomination now. Your family will be able to receive the payout from the insurance faster should the unfortunate event were to occur. Moreover, the nomination is free, unlike application for Letter of Probate/Administration.

Yes, it is true! Though the Motor Reporting Framework was implemented in mid last year to control the motor premium increase, the result is yet to be seen and felt.

The main culprit is the two-fold increase in the injury claims arising from road accidents. There were 17% more accidents last year, resulting in 473 of scrapes per day. The motor industry has lost a record $214.1 million in 2008, up from $103.2 million in 2007. Claims paid out hit $742 million, up from $582 million in 2007. All three major motor insurers, NTUC Income, AIG and AXA, will increase the premium substantially this year.

However, one good sign is that the claims amount was down from $200.7 million in the third quarter to $172.7 million in the fourth quarter of 2008. Motorist should expect to see the result of new Motor Reporting Framework to work in, hopefully, half  to one year's time.