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Consultation Paper by MAS on Insurance (Amendment) Bill 2007 on Nomination of Beneficiaries
Posted on Thursday, July 26, 2007 - 09:00 PM

Presently, there are no provisions in the Insurance Act to govern the nomination of beneficiaries to the proceeds from insurance policies. MAS will be amending the Insurance Act to incorporate a framework for the nomination of beneficiaries. MAS had, in December 2005, issued a consultation paper on the proposed framework and MAS’ responses to the feedback received during the consultation were published in April 2006.

2. This second consultation paper contains the proposed Insurance (Amendment) Bill 2007 (“the Bill”) to implement the framework. The Bill provides for both trust and revocable nominations to be made:

a) trust (irrevocable) nominations will create a statutory trust, meaning that the policy owner will have to give up all rights and ownership over the policy. At the same time, the policy proceeds in question will not be subject to the policy owner’s debts. Only the policy owner’s spouse and/or children will be eligible to be irrevocably-nominated as beneficiaries. All proceeds from the policy, whether paid out while the policy owner is alive or after his death, will belong to the beneficiaries. If a beneficiary predeceases the policy owner, his portion of the benefits will go to his estate. Trust nominations are similar to existing nominations made under section 73 of the Conveyancing and Law of Property Act. The nomination framework will, however, allow policy owners a deliberate choice about whether to make such nominations;

b) revocable nominations will allow all legal entities to be named as beneficiaries. Revocable nominations are not statutory trusts, therefore full rights and ownership over the policy will be retained by the policy owner. Death benefits from the policy will be payable to the beneficiaries, while non-death benefits will be payable to the policy owner. If a beneficiary predeceases the policy owner, his portion of the benefits will be proportionately distributed among the surviving beneficiaries.

3. The Bill will also specify rules governing the disbursement of proceeds from insurance policies. Nominations will be accorded the same legal standing as wills in relation to the disbursement of policy proceeds. Therefore, policy proceeds will be payable in accordance with a trust or revocable nomination or a will, whichever is the latest properly-executed instrument of which an insurer has been notified at the time of the policy owner’s death. Insurers will be discharged of their liabilities under the policy contract once payment has been made in accordance with such an instrument. Only after claims from beneficiaries named in a nomination or will have been satisfied will claims from proper claimants be entertained.

4. MAS invites interested parties to submit their views and comments on the proposed Bill set forth in this consultation paper. Electronic submission is encouraged.

Written comments should be submitted to:
Insurance Supervision Department
Monetary Authority of Singapore
10 Shenton Way
MAS Building
Singapore 079117
Fax: (65) 6229 9694
Email: nobreview@mas.gov.sg

All comments and feedback should be received by 27 August 2007.

5. Please note all submissions received may be made public unless confidentiality is specifically requested for all or part of the submission.

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