Presently, there are no provisions in the Insurance Act governing the nomination of beneficiaries (NoB) to the proceeds from insurance policies. However, a nomination by the policyholder of a spouse and/or children as beneficiaries to the proceeds of a life insurance policy is governed by section 73 of the Conveyancing and Law of Property Act (CLPA). This will automatically create a statutory trust in favour of the nominees. Some insurers and policyholders are concerned about the apparent ambiguities in the application and effect of section 73 of the CLPA.
MAS will be amending the Insurance Act to include a NoB framework. This is to give policyholders greater choice and flexibility in the disbursement of their policy proceeds, and make the process of nominating beneficiaries clearer. Section 73 of the CLPA will then be repealed.
The new NoB framework will:
- provide for both revocable and irrevocable nominations;
- govern the disbursement of proceeds from insurance policies for which nominations have been made; and
- clarify the legal standing of nominations vis-a-vis wills and other legal instruments
MAS is drafting the amendments to the Insurance Act to incorporate provisions for the NoB framework following feedback from the public consultation conducted in December 2005. Implementation is expected by the end of 2007.